Implementation of Honeypot with Kerberos authentication provides a 3-step authentication process to classify white hat and black hat users. It uses an Authentication System, Ticket Granting System and A Server with symmetric key Cryptography to authenticate a client. It uses double encryption in the exchange of tokens and requires every client to authenticate with each of the three systems before accessing the service it requested. Any user who fails to authenticate will be identified as a hacker but with a negative token without the knowledge of the Client. At decryption only the three Systems can identify a user with a positive or negative token. And hence identify an external or internal hacker.