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well the difference i general

specifically for

-two way - PAP

-three way - CHAP

and

what has it got to do with how the connection terminates

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up vote 2 down vote accepted

From PPP Authentication Using the ppp chap hostname and ppp authentication chap

PAP authentication involves a two-way handshake where the username and password are sent across the link in clear text; hence, PAP authentication does not provide any protection against playback and line sniffing.

CHAP authentication, on the other hand, periodically verifies the identity of the remote node using a three-way handshake. After the PPP link is established, the host sends a "challenge" message to the remote node. The remote node responds with a value calculated using a one-way hash function. The host checks the response against its own calculation of the expected hash value. If the values match, the authentication is acknowledged; otherwise, the connection is terminated.

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