A problem with sms though is that you need cell phone coverage. I have been in situations where my transaction has timed out while waiting for the sms text to arrive.
Fun story about this: When Blizzard introduced TOTP, I wrote a Blizzard Auth library and client so that I could use their 2fa on my desktop (https://github.com/jleclanche/python-bna). Why? Because I was sharing my Blizzard account with someone else, but still wanted to use 2fa. And people kept telling me "2fa must be on a different machine otherwise it's not secure", so I was using 2fa wrong and shouldn't use it at all.
Well that's bollocks. Same-machine 2fa is more secure than no 2fa at all. There's another comment below that talks about "perfect being the enemy of good" and that's exactly it.
So we absolutely should start promoting the fact that you can use TOTP on desktop, even if it's less secure. A lot of users don't use 2fa because they either don't have a phone, or don't have their phone constantly with them.
If the token's seed is secure (YMMV), it doesn't matter if it's on the same machine.
The convention is that the chances of two devices getting stolen together are smaller. That's why offsite backups are a thing.
When Battle.net authenticators were introduced, the primary threat was keyloggers and leaked passwords (from reuse). Both of those threats are eliminated by TOTP, wherever it is.
But this discussion was more about if the machine was stolen and the bad guys logged in to your online accounts from it.
In that case it is true they would have your OTP, but they shouldn't have your Blizzard password.
Passwords (on the OS account and on the Blizzard account) mitigate against the machine being stolen.
OTP mitigates against the password being stolen.
It is what you know and what you have so that if someone gets one they don't automatically get the other.
When both the password and the TOTP seed are on the same machine - assuming you autogenerated your password - they are both autogenerated and out of your sight so they really are just two things you have, and you have them in the same place. The difference is, it's impossible to capture the TOTP seed from the TOTP token being input - passwords are vulnerable to that.
Am I crazy or does that make the password completely redundant?
If your password database is not encrypted with a strong passphrase, then you are right, they both become "what you have".
edit: I don't know. Maybe your implementation meets the definition of 2FA. Regardless, it certainly reduces the security
An attacker can then compromise both factors at the same time.
To me, this weakens the point of 2FA a lot.
Additionally, the keylogging threat is severely reduced against most 2fa (because the login has to happen before the user sends the OTP) and can be eliminated completely by ensuring the token code is on a separate screen and creating a 30 second lock on the account while the user is entering the code.
In what world is malware which has full control of the PC stopped by having the token code on a separate monitor but the same logical system (if that's what you're talking about).
An attacker with control of the PC can just get access to any app. on that PC...
This is fun, I have a tablet here on my desk I was given to repair a couple days ago. It's a mainstream tablet here in greece, sold for 70-90€, the sort of thing you'd buy if you are an "ordinary user" who doesn't know any better.
Well it's running a 4.x android with a custom marketplace and it is FULL OF ADWARE. Seriously. There's fullscreen porn popup ads on the OS itself. There's hundreds of spam notifications, a "fake" screenlocker which captures your taps into ads, etc, etc. Seriously, this thing is like a Windows XP SP0 PC from 2005 after heavy adblockless porn usage with flash and java on. I actually haven't seen anything like that this decade.
This is what you get if you buy an off-the-shelf tablet or phone here. This is what "ordinary users" get. We gave up control of our own devices in the name of security, yet shit like this can still happen.
(Sorry for the OT rant. Seeing that tablet pissed me off.)
If you are able to use a second device for your 2FA, great but it is not always possible and 2FA on the same device is still better then no 2FA at all. I don't want to carry around a key just for all my 2FA passwords but still want to use my phone for common tasks that require 2FA.
Or, are we treating the ephemeral 1-time-use token as something the user has?
SMS just works. (except when it doesn't)
Steam is SMS, and I heard they now have a shitty custom 2fa but what you're describing is services that don't use an established standard, which is compatible with hundreds of established clients. SMS isn't merely nonstandard (and now deprecated), it's more expensive for both the user (requires an active sim card) and the server (requires sending SMS to numbers all over the world).
The custom component makes sure that marketplace activity is valid (somewhat like the custom banking dongles you get that require both your pin and some transaction identifier).
They'd be better off allowing the option of standard TOTP auth for login, so users can use a standard authenticator app, and then layer on a custom app for trading if needed.
1: http://steamcommunity.com/discussions/forum/0/49463187366895...
Should Blizzard support multiple users of the same account? Perhaps, but that's out of scope here.