The first task in setting up CHAP authentication is modifying the /etc/ppp/chap-secrets file. This file contains the CHAP security credentials, including the CHAP secret, that are used to authenticate callers on the link.
The next procedure implements CHAP authentication for a dial-in server in a private network. The PPP link is the only connection to the outside world. The only callers who can access the network have been granted permission by managers of the network, possibly including the system administrator.