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Yggdrasil is the name of the authentication system that is currently used for authenticating user credentials for Minecraft.

It, unlike previous versions, stores an access token instead of storing an encrypted form of the Mojang account email address and password.

The name Yggdrasil is a reference of the "World Tree" in old Nordic mythology.

You can find a very in-depth description of the system here: http://wiki.vg/Authentication

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