Implementations of a system and method of generating and using bilaterally generated variable instant passwords are disclosed. The system is used to secure electronic transactions (e.g., an auction in which one or more bidders are unknown to the auctioneer). In this system an Internet Service Provider (ISP), on request from a USER (e.g., a bidder), facilitates an authentication process with a SERVICE PROVIDER (e.g., an auctioneer). The SERVICE PROVIDER may send a sub-folder, containing a USER name, a temporary sub variable character set, and a CALL, to the USER through the ISP. The password used to access the sub-folder is transmitted directly to the USER by the SERVICE PROVIDER. The USER gets authenticated to the SERVICE PROVIDER by using the USER name, the temporary sub variable character set, and the CALL retrieved from the sub-folder. After USER's authentication, further transactions (e.g., bids) are performed using a password for each transaction.