In all secure password-based authentication methods, a server authenticates a client with a password verifier, typically a hashed version of the password that must be rigorously protected. Password-based authentication to an Oracle database is no different. There is a password verifier, and it must be protected as well. This is true if the verifier is stored locally in the database or centrally in the directory. Note that a password verifier cannot be used to derive the original password.
An enterprise user's database password can be stored in a central directory service for access by multiple databases. It can be viewed and shared by all trusted databases to which the user has access. Although the password verifier stored in the directory is not the cleartext password, it is still necessary to protect it from casual or unauthorized access. It is therefore extremely important to define password-related ACLs in the directory that are as restrictive as possible while still enabling necessary access and usability. (Note that Oracle Database supports all verifier types that are supported by Oracle Internet Directory.)
Oracle tools help set up ACLs in the directory to protect these password verifiers during identity management realm creation. The approach that Oracle recommends is intended to balance security and usability considerations. If you require maximum security and can set up wallets for all users, you should require only SSL connections from users to databases. This SSL-only approach circumvents the entire directory password protection issue.
The following sections provide more information about trusted databases and protecting database password verifiers in the directory.