One-time password (OTP) is a password that is valid for only one authentication session; it becomes invalid after use. Unlike traditional static passwords that stay the same for a longer period of time, OTPs keep changing. OTPs are used as part of two-factor authentication: the first step requires the user to authenticate with a traditional static password, and the second step prompts for an OTP issued by a recognized authentication token.
Authentication using an OTP combined with a static password is considered safer than authentication using a static password alone. Because an OTP can only be used for successful authentication once, even if a potential intruder intercepts the OTP during login, the intercepted OTP will already be invalid by that point.
One-Time Passwords in Red Hat Enterprise Linux