A challenge response scheme includes the authentication of a requesting device by an authenticating device. The authenticating device generates a challenge that is issued to the requesting device. The requesting device combines the challenge with a hash of a password provided by a user of the requesting device, and the combination of the hash of the password and the challenge is further hashed in order to generate a requesting encryption key that is used to encrypt the user supplied password. The encrypted user supplied password is sent to the authenticating device as a response to the issued challenge. The authenticating device generates an authenticating encryption key by generating the hash of a combination of the challenge and a stored hash of an authenticating device password. The authenticating encryption key is used to decrypt the response in order to retrieve the user-supplied password. If a hash of the user-supplied password matches the stored hash of the authenticating device password, then the requesting device has been authenticated and the authenticating device is in possession of the password.