SCRAM is a new mechanism designed to let you sign in into your servers much more securely than with existing mechanisms. It involves applying various algorithms to your password to make it extremely difficult to hack.
The SCRAM-SHA-1 SASL mechanism was added to the XMPP spec, and replaces the legacy DIGEST-MD5 mechanism. Its various security features include hashed passwords being send over the internet, and hash passwords being stored on disk. Attackers which can read the network traffic or the server's password database are unable to do any harm.
I just finished a SCRAM-SHA-1 implementation for Psi as part of my GSoC project. There are test cases to write and wider testing to be done, but we now have a working implementation.
What does this mean for Psi users? Well, usually, when you don't want to enter your password each time you login, you tell Psi to save it. Most clients, if not all, store it in clear text form if you tell them to store it at all. This is fairly insecure, and anyone with access to the computer could get access to your password. It's a common security advice that you shouldn't use the same password for all your accounts on various services on the internet. However, human laziness is a powerful force. So, if you use the same password for various services, and someone malicious gains access to it, she/he can gain access into all the other accounts where you used that password.
Now SCRAM comes into play. If your server supports this, and your client supports this, you can have them store your password in a form not very usable by attackers. Thankfully Prosody got some new authentication backend APIs thanks to Jeff Mitchell. You can read more about that in Jeff's blog post. Effectively this means that if a malicious person gains read access to your network or the server, they can't do anything, and if they gain access to your computer, they can do nothing more than login into your jabber account.
What are the consequences of using a hash to login? It basically comes down to support. It requires support by both the client and the server. Only when both have support do you get the full security SCRAM offers. On client side, since you're clearing your plaintext password you have to login using SCRAM in the future. On the server side, you're storing the iteration count, salt and the and two keys instead of the plaintext password. This reduces your possible login methods to only PLAIN (this should only be done over TLS) and SCRAM-SHA-1.
This is currently only available in a development branch. It'll soon get merged into the main branch. To enable this in Psi, first make sure your server supports SCRAM. Then go to the Misc tab in your Account Properties dialog and check the checkbox labelled “Store password as salted hash...”.
Apply the changes. Reconnect.
Now when you visit your Account Properties dialog, you'll notice that the input box for your password is empty. YAY.
So what's next on the agenda for my Google Summer of Code project? Currently I'm a little behind but I'll get started on implementing stanza acknowledgement and session resumption of XEP-0198 the next couple of days to get back on the track.