---
url: 'https://www.corbado.com/blog/password-managers-problem'
title: 'Why Password Managers Don''t Solve the Password Problem'
description: 'Password Managers'' Limitations: Understand the challenges and why developers are turning to passkeys for enhanced security.'
lang: 'en'
author: 'Robert'
date: '2022-12-22T00:00:00.000Z'
lastModified: '2026-08-25T06:00:26.859Z'
keywords: 'password problem, problem of passwords'
category: 'Passkeys Strategy'
---

# Why Password Managers Don't Solve the Password Problem

## Key Facts

- **User adoption rates** for password managers sit at around 20%, leaving the majority of
  users still relying on weak or reused passwords across accounts.
- Password managers remain vulnerable to **phishing and malware** attacks. A compromised
  database exposes all stored user credentials simultaneously, as the LastPass incident
  demonstrated.
- The **passwordless shift** threatens password managers' core business model, as more
  websites replace passwords with biometrics and one-time codes, reducing demand for
  credential vaults.
- Passkeys use **public-key cryptography**: a private key stays on the user's device and
  never leaves it, making them resistant to credential theft and cyberattacks.
- Unlike password managers, passkeys require no software installation on each device,
  removing a key friction point that contributes to the 20% **adoption ceiling**.

## 1. Introduction: The Password Problem

One of the most common struggles people face in the digital age is managing their
passwords. With the endless number of websites and online accounts that require a unique
login, it becomes way more difficult to remember all the different passwords. A solution
that has emerged to keep track of passwords in the online world are password managers.

## 2. Strategic Problems of Password Managers

Password managers, such as [Dashlane](https://www.corbado.com/blog/dashlane-passkeys),
[LastPass](https://www.corbado.com/blog/lastpass-data-breach), and
[1Password](https://www.corbado.com/blog/1password-passkeys-best-practices-analysis), are tools that help people
to create and manage unique passwords for their online accounts. These software and
services offer a single and encrypted location where you can store all your login
credentials. Having a digital vault remember your passwords may seem like a blessing, but
there are multiple problems with passwords managers. Here are some of the major ones:

### 2.1 Problem 1: Low user adoption rates

One major problem with password managers is that they require users to install the
software on every device they use, add their credentials to the
[password manager](https://www.corbado.com/blog/passkeys-vs-password-managers), and ensure that everything is
properly synced. This can be a cumbersome task for many people, leading to low user
adoption rates of around 20%. This low adoption rate is a problem for companies that rely
on password managers for authentication, as it means that many of their users are still
using weak, easily guessable passwords or reusing the same password across multiple
accounts.

### 2.2 Problem 2: Vulnerability to attacks

Additionally, password managers are often targeted by hackers. The recent security
incident at [LastPass](https://www.corbado.com/blog/lastpass-data-breach) is just one example of this. While
password managers do offer some protection against password-based attacks, they are still
vulnerable to other types of attacks, such as [phishing](https://www.corbado.com/glossary/phishing) or
[malware](https://www.corbado.com/glossary/malware). If a
[password manager](https://www.corbado.com/blog/passkeys-vs-password-managers)'s database is compromised, all the
user's passwords are at risk of being exposed.

### 2.3 Problem 3: Passwordless future

The business model of password managers relies on people continuing to use passwords as
the primary method of authentication for their online accounts. However, as online
security continues to improve, the way we log in to websites and online accounts is also
evolving. More and more websites and services are moving towards passwordless
authentication methods, which eliminate the need for passwords. These methods use
biometric data or other unique characteristics to verify a user's identity, such as
one-time codes sent via text or email. As these technologies become more widespread, it's
likely that we'll see even more websites and services adopting
[passwordless authentication](https://www.corbado.com/glossary/passwordless-authentication) in the future.

## 3. Passkeys as the solution

Passkeys as the new authentication standard offer comprehensive solutions to the
above-mentioned problems of password managers. Using biometric login like
[Face ID](https://www.corbado.com/faq/is-face-id-passkey), Touch ID and [Windows Hello](https://www.corbado.com/glossary/windows-hello),
they create a simple and convenient solution that will boost adoption and never require a
password again. Also, passkeys are the most secure authentication method since they rely
on public- key cryptography, where a private key is stored on the users
[passkey device](https://www.corbado.com/blog/device-bound-synced-passkeys) and a public key is stored on a
dedicated server. Because the private key never leaves the
[passkey device](https://www.corbado.com/blog/device-bound-synced-passkeys) it is highly secure and resistant to
any cybercriminal. Lastly, passkeys are already prepared for a passwordless future as they
rely on a technology that works completely without passwords, while also creating a
promising business model.

The recent acquisition of Passage by
[1Password](https://www.corbado.com/blog/1password-passkeys-best-practices-analysis) shows that password managers
are about to strengthen their passwordless capabilities in the passkeys area. Still, it is
important to note that they require customers to install their software. This means that
users must take the time to download and set up the
[password manager](https://www.corbado.com/blog/passkeys-vs-password-managers) on all of their devices as well as
requiring their users to remember a master password.

## 4. Recommendation

Instead of relying the burden of going passwordless to the users and requiring them to
install additional software, SaaS and [e-commerce](https://www.corbado.com/passkeys-for-e-commerce) companies
should take responsibility for implementing
[passwordless authentication](https://www.corbado.com/glossary/passwordless-authentication). By offering passkeys
as a central authentication method, companies can simplify the login process for their
users and increase security by eliminating the need for passwords.

At Corbado, we are working on passwordless and passkey-centered authentication solutions
that prioritize user experience. Our solution is designed to be easy to integrate and
convenient for the user, while also providing strong security against cyber threats.

## 5. How Corbado can help

That recommendation rests on an assumption worth checking first: that your users are not
already served by the manager they have. [Corbado Observe](https://www.corbado.com/observe) is the authentication
observability layer, and one of the things it resolves is where the passkeys your users
hold are actually stored.

[Video: Authenticator inventory](https://www.corbado.com/videos/features/authenticator-inventory.mp4) ([See Authenticator Inventory in Corbado Observe](https://www.corbado.com/observe/authenticator-inventory))

- **Inventory** resolves [authenticators](https://www.corbado.com/glossary/authenticator) through two catalogs.
  The FIDO Metadata Service covers
  [hardware security keys](https://www.corbado.com/blog/best-fido2-hardware-security-keys), and a separate
  platform-[authenticator](https://www.corbado.com/glossary/authenticator) catalog resolves
  [iCloud Keychain](https://www.corbado.com/glossary/icloud-keychain),
  [Google Password Manager](https://www.corbado.com/blog/how-to-use-google-password-manager) and third-party
  managers. Credentials in neither show as a truncated [AAGUID](https://www.corbado.com/glossary/aaguid), which
  keeps the unknown share visible.
- The same page splits credentials by class, into synced, device-bound and security-key
  shares. That distinction is the one section 3 turns on: a credential in a synced
  ecosystem store follows the user to their next device, one bound to a laptop does not.
- **Passkey Insights** shows the distribution by sync state, transport and
  [authenticator](https://www.corbado.com/glossary/authenticator). It answers "which providers do our users
  actually rely on" with a distribution, which is a better basis for the
  [LastPass](https://www.corbado.com/blog/lastpass-data-breach) and
  [1Password](https://www.corbado.com/blog/1password-passkeys-best-practices-analysis) questions in this post
  than any single vendor's announcement.

## Frequently Asked Questions

### What happened with LastPass that shows password managers aren't fully secure?

LastPass experienced a security incident that illustrates a fundamental risk of password
managers: when their database is compromised, all stored user credentials are exposed at
once. This single point of failure means a breach affects every account a user has stored,
regardless of how strong those individual passwords are.

### Should SaaS or e-commerce companies rely on password managers to make their users go passwordless?

According to the article, SaaS and e-commerce companies should take direct responsibility
for implementing passwordless authentication rather than shifting that burden to users.
Offering passkeys as a central authentication method simplifies login and improves
security without requiring users to install third-party software or remember a master
password.

### What is 1Password doing in the passkeys space and does it fully solve the problem?

1Password acquired Passage to strengthen its passwordless and passkeys capabilities.
However, the article notes that password managers still require users to install their
software on all devices and remember a master password, which limits how seamless a truly
passwordless experience can be.

### How do passkeys protect against phishing when password managers cannot?

Passkeys use public-key cryptography where the private key is stored on the user's device
and never transmitted to a server, making credential interception impossible. Password
managers, by contrast, remain vulnerable to phishing and malware even when encrypting
stored passwords, because they still rely on the user entering retrievable credentials.