SNMPv3 Proposed Internet Standards

To correct the security deficiencies of SNMPv1/v2, SNMPv3 was issued as a set of Proposed Standards in January 1998 (Table 1). This set of documents does not provide a complete SNMP capability but rather defines an overall SNMP architecture and a set of security capabilities. These are intended to be used with the existing SNMPv2. As one of the SNMPv3 working documents puts it, "SNMPv3 is SNMPv2 plus administration and security."

SNMPv3 includes three important services: authentication, privacy, and access control . To deliver these services in a flexible and efficient manner, SNMPv3 introduces the concept of a principal, which is the entity on whose behalf services are provided or processing takes place. A principal can be an individual acting in a particular role; a set of individuals, with each acting in a particular role; an application or set of applications; or combinations thereof. In essence, a principal operates from a management station and issues SNMP commands to agent systems. The identity of the principal and the target agent together determine the security features that will be invoked, including authentication, privacy, and access control. The use of principals allows security policies to be tailored to the specific principal, agent, and information exchange, and gives human security managers considerable flexibility in assigning network authorization to users.

Please refer below link for further reading, It's one on of the best articles on SNMPv3 by by William Stallings.

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