JSON Web Token (JWT) and Open Authorization (OAuth) are often treated as competing alternatives, but they serve fundamentally different purposes. This confusion causes insecure implementations that leave workloads vulnerable, particularly in machine-to-machine communication.
Here’s what you need to understand: OAuth is an authorization framework that defines how to grant access. JWT is a token format that defines what the token looks like. They work together.
This article clarifies exactly what each technology does, how they interact in real systems, and how to implement them correctly for workload authentication without the security gaps that plague most deployments.
What OAuth Does
OAuth 2.0 is an authorization framework that defines how applications obtain limited access to resources without exposing credentials. It defines multiple authorization flows for different scenarios:
Authorization code flow: Designed for web applications where the server-side code can securely store secrets and handle user consent. The user authenticates with the authorization server, which redirects back to the application with a code that the server exchanges for tokens.
Implicit flow: Optimized for browser-based single-page applications where code runs entirely in the browser. Tokens are returned directly in the redirect URL without a code exchange step, though this flow is now deprecated in favor of an authorization code with PKCE.
Client credentials flow: Built specifically for machine-to-machine communication, where no user interaction occurs. Services authenticate directly to the authorization server using their client ID and secret to receive access tokens.
Resource owner password credentials flow: Allows trusted applications to collect user credentials directly and exchange them for tokens. This flow should only be used when other flows aren’t viable, as it requires users to share passwords with the application.
The critical distinction here is authorization. OAuth determines what a requester can access, not who they are. Think of it as the framework that governs permission grants across different systems and services.
What Is JWT?
JWT is a compact, URL-safe token format for securely transmitting information between parties as a JSON object. It consists of three parts separated by dots:
Header: The header declares the cryptographic algorithm used for signing (such as HMAC SHA256 or RSA) and identifies the token type as JWT. This information allows the recipient to understand how to validate the token’s signature properly.
Payload: The payload carries claims, which are statements about an entity and additional metadata. These claims include standard fields like issuer, subject, audience, and expiration time, plus custom claims for permissions or other application-specific data.
Signature: The signature is generated by encoding the header and payload with Base64Url, then signing the result using the algorithm specified in the header. This cryptographic signature ensures that the token hasn’t been altered in transit and validates that it was issued by a trusted authority.
The power of JWT lies in its self-contained nature. Because all the necessary information is embedded in the token itself, receiving services can validate tokens and extract authorization information locally without calling back to a central server. This makes JWTs particularly efficient for distributed systems where services need to make rapid authorization decisions at scale.
However, JWT is just a standardized way to package and sign claims. It doesn’t dictate how tokens are issued, refreshed, or revoked. That’s where authorization frameworks like OAuth come in.
How OAuth and JWT Work Together
In most production systems, OAuth and JWT complement each other. OAuth 2.0 defines the authorization flow and token lifecycle. OpenID Connect, an identity layer built on top of OAuth 2.0, provides authentication services and allows clients to verify the identity of end-users based on the authentication performed by an authorization server, providing user information as JWTs.
Here’s a typical flow in workload authentication:
- A service requests access to a protected resource and needs credentials to proceed.
- The service authenticates to the OAuth authorization server using the client credentials flow.
- The authorization server validates the credentials and evaluates access policies to determine appropriate permissions.
- The server issues a JWT access token containing the authorized scopes and claims.
- The service presents this JWT to the resource server.
- The resource server validates the JWT signature and claims before granting access.
The confusion between OAuth and JWT often stems from their overlapping presence in authentication flows. When you see “OAuth authentication,” you’re seeing OAuth authorization combined with token-based authentication using JWTs.
The Shift to OAuth 2.1: Modernizing Authorization for Workloads and MCP
OAuth 2.1 is the next evolution of the OAuth standard. It consolidates lessons learned from years of deployment and integrates best practices that were previously scattered across multiple extensions and drafts. The goal is to simplify implementation, strengthen security, and create a more predictable framework for both human and non-human authentication.
OAuth 2.1 formally replaces several older flows and patterns that created operational risk. The implicit flow and resource owner password credentials flow are deprecated. The authorization code flow now always requires Proof Key for Code Exchange (PKCE), providing additional protection against interception attacks. Refresh tokens must rotate automatically to prevent replay. Mutual TLS (mTLS) and sender-constrained tokens are recommended for sensitive integrations, ensuring that tokens can only be used by the client that received them.
For workload and machine-to-machine use cases, OAuth 2.1 provides a clearer and more secure baseline. It standardizes how client credentials are exchanged and validated, how access tokens are scoped, and how token exchange (RFC 8693) can be applied across environments. These improvements align directly with how modern workload identity systems operate, where each service or container authenticates using its own verifiable identity instead of a shared secret.
The Model Context Protocol (MCP) and other new frameworks for AI agent interoperability will depend on these principles. OAuth 2.1 enables standardized authorization between agents, services, and APIs, supporting short-lived, verifiable tokens without persistent secrets. By adopting OAuth 2.1, organizations gain a more secure and consistent authorization model that fits both human identity systems and automated workloads operating across cloud and AI ecosystems.
OAuth and JWT for Workload Authentication
Applying OAuth and JWT to workload identity introduces challenges that don’t exist in human authentication scenarios. Humans can use MFA, push notifications, and browser logins. Workloads cannot use manual authentication, so they rely on certificates, attestation, or tokens. This creates a fundamental problem with traditional OAuth client credentials. Storing a client secret in a container image, environment variable, or configuration file creates a persistent attack vector.
The better way to authenticate workloads involves eliminating long-lived secrets through attestation-based authentication, which is a security architecture where workloads do not manage or store long-lived secrets (like passwords or API keys). Instead, they authenticate using cryptographically verifiable identity claims and receive short-lived, dynamically generated credentials or access resources directly through a broker, without ever handling persistent secrets.
For multi-cloud and hybrid environments, workload identity federation (WIF) extends this approach across cloud boundaries. Identity federation allows one identity system to validate identities issued by another, enabling cross-domain trust. A workload in one cloud presents its cryptographically signed identity token, which the target authorization server validates and exchanges for a new JWT scoped to local resources. This eliminates the need to provision and manage duplicate service accounts across different clouds while maintaining the same attestation-based security model.
Choosing the Right Approach for Your Architecture
The right implementation depends on your specific architecture:
Single Cloud, Single Identity Provider
Use cloud-native managed identities. AWS IAM roles work natively within AWS but require federation for cross-cloud access. Kubernetes ServiceAccounts provide identity but not cross-namespace authentication. AWS IAM roles, Azure Managed Identities, and GCP Service Accounts implement OAuth and JWT internally while eliminating credential storage. Your application authenticates using the cloud’s metadata service and receives JWT access tokens without managing secrets.
Multi-Cloud Or Hybrid Environments
Implement workload identity federation with centralized policy. Use OAuth 2.0 token exchange (RFC 8693) to enable workloads in one cloud to access resources in another. RFC 8693 defines how to exchange one token type for another, for example, exchanging an AWS IAM token for an Azure access token. A workload presents its home-cloud JWT, which the target authorization server validates and exchanges for a new JWT scoped to local resources. This requires a federation platform that can validate tokens from multiple issuers and enforce consistent policy across clouds.
Legacy Applications Without Code Changes
Consider a broker pattern for eliminating long-lived secrets. A proxy intercepts outgoing requests from a microservice, injects the required credentials, and enforces policy without any changes to the microservice’s code. The proxy handles OAuth flows, JWT validation, token refresh, and credential injection transparently. The application makes standard HTTP requests, unaware that the proxy is managing authentication.
Implement Workload Identity Federation Using OAuth and JWT
Understanding how OAuth and JWT work together is essential, but the real challenge lies in implementation. Applying these protocols to workloads across multiple clouds means establishing trust relationships, configuring token exchange, managing credential lifecycles, and enforcing consistent policies, all while eliminating static secrets.
Aembit solves this issue at scale through a unified workload IAM platform. We use environment attestation to prove workload identity through the OAuth 2.0 client credentials flow with cryptographic verification rather than traditional client secrets, then issue short-lived JWT access tokens with automatic refresh. Our platform handles cross-cloud federation, conditional access policies, and transparent credential injection, so your microservices, CI/CD pipelines, and serverless functions authenticate correctly without developers writing authentication code.Reach out to us to learn more.
