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What is it?
In today’s online world we all use numerous web services and tools which require user authorization. And this is the same reason we have to memorize a large number of user names and the corresponding passwords to login to various web services. OpenID is an initiative to solve this problem by eliminating the need for using multiple username on different websites and simplifying the process of user authorization. So in short, OpenID allows you to access multiple web services by using the same digital identity. For example, let’s say that OpenID makes it possible for you to log in to your LiveJournal account by using your Technorati user id and password, thereby eliminating the need to have a separate LiveJournal user id.
How it Works
Here’s a practical example of how OpenID works. Lets say you want to login to LiveJournal but you don’t have a LiveJournal user id. The most imminent solution is to create a LiveJournal user id. However, you can also spare you that hassle of creating a LiveJournal user account (thereby eliminating the need to remember one more user id and password) if you login to LiveJournal using an OpenID! Let’s assume that you already have a user account with Technorati. As Technorati is also an OpenID provider, you can use your Technorati user account as your OpenID to login to LiveJournal (or any other web services supporting OpenID login).
You can see a link in LiveJournal which says ‘Login w/ OpenID’. Clicking on it takes you to another page which asks you for your OpenID URL. Now as we are going to use your Technorati user credentials as your OpenID, it is useful to know that your OpenID URL for Technorati user account is the URL to your Technorati user profile page, the URL of which looks like "http://technorati.com/people/technorati/your_user_id". Replace "your_user_id ' in this URL with your Technorati user id and you get the URL you can use as your OpenID provided by Technorati.
In the LiveJournal OpenID login page enter your OpenID URL and click Login. If you have provided the correct URL you would be taken to the Technorati OpenID authentication page where it will ask you to login to Technorati (if you aren't logged in already) and ask you if it is OK to grant permission to LiveJournal to verify your identity. You can also set several options like 'grant always', 'grant once' etc., and set permissions. Once this is done you would be redirected to your LiveJournal page automatically fully authenticated (given you grant access). So, you can see how it eliminated the need of creating a new LiveJournal user account by using your Technorati account to login to Live Journal.
What it means for businesses?
Using OpenID is beneficial to businesses as it minimizes the cost of password and account management and at the same time providing the user with an easy to use user authorization process.
What it means for users?
The ultimate advantage OpenID provides a user is that it provides the user with an easy to use authorization process thereby minimizing the frustration users face to maintain and remember multiple user names and passwords for multiple websites.
OpenID is widely supported by large websites like MySpace, Yahoo!, Technorati, AOL, BBC, LiveJournal etc.
Numerous web services (large and small) are providing OpenID authorization. Here you can find a big list of OpenID providers.