Note: I wrote this a while ago, and I haven't gone over it completely, but I thought it would be worth posting about.
I read about OpenID a while ago, when my friend asked me what I thought of it from a security perspective, and from what I could tell from the documentation, except for DNS issues it wasn't a bad decentralized authentication protocol. And I didn't do any further research into it until I came a blog entry describing how it worked in practice http://www.readwriteweb.com/archives/openid_vs_bigco.php).
In that article/flash 'demo' I saw that as with any protocol, developers can come up with great 'features' which damage the security of the protocol. And this isn't one OpenID provider deciding to add an insecure feature, either, it is one that is common throughout the 3 OpenID providers mentioned in the article, which I assume are the most popular ones being used (why else would a blogger mention them?).
Now, what is this feature I feel should not exist? It is the feature to set a site to be able to accept your credentials without you having to enter your OpenID password, and since your OpenID provider does not provide these details to the host, they do
Of course, you still need to be logged into your OpenID provider, but since you're meant to be using this login for several sites, its not too much of a stretch to believe that you're going to be logged in all the time you're online - which is quite a large time frame. And if we consider that most sites will these days tell other users when a person is online, or allow you to reveal that fact yourself via posting comments, photos, etc, its not too difficult.
But enough about the feature itself; what does it mean to us? This means that an attacker can log you into any site you decided to trust via CSRF attacks because the site cannot tell if you've entered a password. Now this might not seem important, but it is very important for both large and targeted attacks because the user no longer needs to be logged into the service you want to attack, but merely logged into the central service.
Even worse, this fact is completely misrepresented to users. The questions that are posed essentially revolve around whether you trust the site that wants to verify your identity, and whether or not your OpenID provider should always verify your identity to this source, so even if a user is generally cautious about these kind of things, if something like an email provider started using this a user would be more likely to trust the site, and cause security issues. Essentially the more critical the information you are accessing the more likely to trust the site you are trying to access, and so the more critical sites are the ones which will have issues with this; lets just hope they don't use OpenID though, because leaving DNS security, essentially up to your users, is as about the worst idea anyone could come up with, but that's another rant altogether.
For reference, the 3 OpenID providers I tested were:
http://www.myopenid.com/ where users are asked if they want to allow the site they want to log into to be able to verify their identity, and the insecure answer is "Allow Forever"
http://www.claimid.com/ where users are asked if they want to log into a site, and the insecure answer is "Login and Trust"
http://www.videntity.org/ where users are asked if they trust the remote site with their identity, and the insecure answer is "Yes, and don't ask me Again"
Another insecure 'feature' is the lack of need to enter a password to register for a site. Out of those 3 OpenID vendors, only http://www.claimid.com/ asked users for a password when registering for a site, the other two had only CSRF protections. This is admittedly not particularly serious because you still need an XSS (or similar) flaw in the OpenID provider's site before you can take advantage of the design idea, but it is rather worrying that people designing secure systems don't seem to want to implement defence in depth.