JWT vs OAuth2 vs API Keys — Choosing the Right Authentication Strategy for Modern Applications - JWT #4

Introduction

If you’ve been building APIs or web applications, you’ve likely come across terms like JWT, OAuth2, and API Keys. Each of these methods handles authentication and authorization, but they differ in complexity, use cases, and security level.

As developers, especially in the .NET world, understanding which method suits your app best can make or break your system’s security and scalability.

In this post, we’ll explore the differences between JWT, OAuth2, and API Keys, how they work, real-world examples, and guidance on choosing the right one for your project.

1. Quick Overview — What Are JWT, OAuth2, and API Keys?

2. JWT (JSON Web Token)

JWT is a self-contained token used for securely transmitting information between parties. It’s composed of three parts: Header, Payload, and Signature.

A typical JWT looks like this:

eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.
eyJ1c2VySWQiOiIxMjMiLCJyb2xlIjoiQWRtaW4ifQ.
H2mYlNQoDq8qytpGzE4yPcvFbWvEl1eYlZxvQG_oZgw

Each token is digitally signed, ensuring it can’t be tampered with.

How It Works

1. User logs in with credentials.
2. Server validates credentials and generates a JWT.
3. Client stores the JWT (e.g., in localStorage or cookies).
4. On each request, client sends JWT in the Authorization: Bearer <token> header.
5. Server verifies signature and decodes the payload to identify the user.

Pros

• Stateless and scalable (no need to store sessions in DB).
• Fast validation.
• Works well with microservices and SPAs.

Cons

• Tokens can’t be revoked easily before they expire.
• If stored insecurely, can be stolen (e.g., via XSS).

Best for: APIs and SPAs requiring fast, stateless authentication.

3. OAuth2

OAuth2 is not just an authentication system—it’s a delegated authorization framework. It’s widely used when you want to grant third-party apps access to your data without sharing your password.

Real-World Example

When you “Sign in with Google” on a website, you’re using OAuth2.
Google authorizes the site to access your profile data without giving them your Google password.

How It Works

1. The user is redirected to the OAuth provider (like Google).
2. The user logs in and consents to share data.
3. The provider sends an authorization code to the app.
4. The app exchanges the code for an access token (and sometimes a refresh token).
5. The access token is used to call APIs.

Pros

• Delegated access with granular permissions (Scopes).
• Supports refresh tokens.
• Very secure for third-party integrations.

Cons

• Complex to implement correctly.
• Overkill for small internal APIs.

Best for: Third-party apps, large ecosystems, or when using social logins (Google, GitHub, Facebook, etc.).

4. API Keys

API Keys are the simplest form of authentication—a single secret token used to access an API.

Example:

GET /api/data
Authorization: ApiKey 12345-abcde-67890

The server checks whether the key is valid and grants access.

Pros

• Simple to use and implement.
• Great for internal services, scripts, or prototypes.

Cons

• No user context (only identifies the calling app).
• Hard to revoke without affecting clients.
• Doesn’t support scopes or permissions easily.

Best for: Simple internal APIs or backend-to-backend services.

5. JWT vs OAuth2 vs API Keys — The Deep Comparison

6. Choosing the Right Strategy

Let’s break it down by scenario.

When to Use JWT

• You’re building a .NET Web API or microservices system.
• You want stateless authentication (no server session).
• You handle both authentication and authorization internally.

Example: A React + .NET Web API app where the user logs in, gets a JWT, and uses it for all API requests.

When to Use OAuth2

• You want to let users log in using Google, Facebook, or Microsoft.
• You need fine-grained scopes and refresh tokens.
• You’re building a multi-tenant SaaS that integrates with other platforms.

Example: Your app allows “Login with GitHub” to fetch user repositories.

When to Use API Keys

• You’re securing internal APIs, cron jobs, or backend integrations.
• Simplicity is more important than flexibility.

Example: A background worker service calling your internal metrics API with a single shared API Key.

7. Combining Methods (Real-World Architecture)

In modern systems, it’s common to combine these methods:

• Use OAuth2 for user authorization (delegated access).
• Use JWTs to represent access tokens in your APIs.
• Use API Keys for internal service-to-service communication.

This hybrid approach gives you the best of all worlds — scalability, security, and flexibility.

8. Security Best Practices

No matter which method you choose:

• Always use HTTPS.
• Never store tokens in plain text or URLs.
• Implement token expiration and rotation.
• Prefer short-lived access tokens and refresh tokens.
• Regularly rotate API Keys.

Conclusion

Choosing between JWT, OAuth2, and API Keys isn’t about which is “best” — it’s about what fits your app’s needs.

• For modern web apps → JWT
• For third-party integrations → OAuth2
• For simple internal APIs → API Keys

By understanding the strengths and trade-offs of each, you can design a secure, scalable authentication system that fits your project perfectly.