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1) I like the single-use token, but I'm interested in hearing others' perspectives.

2) Don't just hash. Use bcrypt, since it's probably got a library for you to use in your language (or database) of choice: http://codahale.com/how-to-safely-store-a-password/

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We do use BCrypt. Trying to figure out if implementing an extra layer of sending an email with a link to reset password has advantages over just sending a one time changed password.

It is easier on the user.

Why don't you just send a link that includes your one time password? This will allow the user to choose a new one just clicking on the link and setting the new password, instead of going to your page, logging in and changing the password after that.

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