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I was wondering what this could be good for, but then I noticed that sharing my XMPP account password with some strange website would be a bad idea. Instead giving them session based access to my account could be acceptable.

I am curious what the author is planning to build on top of that.

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You are only giving the site your JID (username) not password and it verifies that you control the JID so you really are jepz@example.com

Indeed, it should be comparable to authentication by token or link sent via email.

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