For the purpose of securing REST API using JWT, according to some materials (like this guide and this question), the JWT can be stored in either localStorage or Cookies. Based on my understanding:
So based on the above premise - it will be best if we store JWT in Cookies. On every request to server, the JWT will be read from Cookies and added in the Authorization header using Bearer scheme. The server can then verify the JWT in the request header (as opposed to reading it from the cookies).
Is my understanding correct? If so, does the above approach have any security concern? Or actually we can just get away with using localStorage in the first place?
I like the XSRF Double Submit Cookies method which mentioned in the article that @pkid169 said, but there is one thing that article doesn't tell you. You are still not protected against XSS because what the attacker can do is inject script that reads your CSRF cookie (which is not HttpOnly) and then make a request to one of your API endpoints using this CSRF token with JWT cookie being sent automatically.
So in reality you are still susceptible to XSS, it's just that the attacker can't steal your JWT token for later use, but he can still make requests on your user's behalf using XSS.
Whether you store your JWT in a localStorage or you store your XSRF-token in not http-only cookie, both can be grabbed easily by XSS. Even your JWT in HttpOnly cookie can be grabbed by an advanced XSS attack.
So in addition of the Double Submit Cookies method, you must always follow best practices against XSS including escaping contents. This means removing any executable code that would cause the browser to do something you don’t want it to. Typically this means removing // <![CDATA[ tags and HTML attributes that cause JavaScript to be evaluated.