At the moment, we rely on the client to hash their password before sending it over the wire. We do this so that our clients don't have to trust our API server with their credentials. The digest is now effectively being used as a password.
However, any proxy servers which sits between our client and our server would be able to read the digest, and can authenticate using those "stolen" credentials and masquerade as our client.
Another issue is that although our API server is able to authenticate the client, the client has no way of verifying our server's identity. Again, proxy servers can masquerade as our API server and trick the client into sending sensitive information to them.
To only way to reliably ...
