PPP uses Password Authentication Protocol (PAP) and Challenge Handshake Authentication Protocol (CHAP) for authentication. PAP sends logon information in cleartext, but CHAP sends the password in a hash to prevent anyone sniffing the wire from seeing the password. Microsoft developed two additional forms of CHAP as well: MS-CHAP, which Cisco routers support, and MS-CHAP v2, which Cisco routers do not support.
PPP requires negotiation, and many settings on each side must match before a link can come up. PPP supports compression, where information can be compressed before it crosses the WAN to be decompressed by the peer router, and multilink, which allows multiple circuits such as DS0s to be logically bundled into a single larger unit.
PPP also supports callback and link quality monitoring. A user on the road could call the router for access, but callback would make the router call the user back. You can use callback to reduce long-distance calls. You can also statically assign a phone number, for security purposes, requiring the user to always connect at the same number. Link quality monitoring monitors the line for packet loss. If packet loss exceeds a preset percentage, the connection is disconnected.
Enabling PPP options on one side but not that other can cause handshake problems. Some features of PPP, such as compression, must match on both sides or the link won't be set up.
