The reason to use a different salt for each user's password is so that an attacker can't take a list of all the hashed passwords and see if any of them match the hash of something easy like "password" or "12345". If you were to use the password itself as salt, then an attacker could calculate md5("12345".md5("12345")) and see if it matched any entries.
As I understand it, there are four levels of hashing you can use on a password table:
-
None - store the password as plain text. If someone gets a copy of your database, they have access to all accounts. Plain text is bad, 'mkay?
-
Hash the password - store the hash of the password, and throw away the real password. If someone gets a copy of your database, they can't see any passwords, only hashes. However, if any users have used weak passwords, then their hashes will appear in rainbow tables. For example, if a user has the password "password", then an md5 hash stored in the database would be "5f4dcc3b5aa765d61d8327deb882cf99". If I look up that hash in a rainbow table like the one at gromweb.com, it spits out "password".
-
Use a salt value - choose a large random string like a GUID and store it in your configuration file. Append that string to every password before calculating a hash. Now the rainbow table is far less likely to work because it probably won't have an entry for "password59fJepLkm6Gu5dDV" or "picard59fJepLkm6Gu5dDV". Although precalculated rainbow tables are not as effective anymore, you can still be susceptible if the attacker knows your salt value. The attacker can calculate the hash of a weak password plus your salt and see if any user in your database uses that weak password. If you've got several thousand users, then each hash calculation lets the attacker make several thousand comparisons. How you actually use the salt may depend on the encryption algorithm you're using. For simplicity, just imagine it as appending the salt and the password together.
-
Use a distinct salt value - now you take something distinct like the user name, e-mail address, or even user id, and combine that with the password and the large random string from your configuration file before you calculate the hash. Now an attacker who knows your salt still has to recalculate the hash for every user to see if they have used a weak password like "password".
For more details, check out the Coding Horror post, "You're probably storing passwords incorrectly".
