In fact, this can be a serious security issue. The reason passwords are hashed is because of failure planning. An attacker can gain access to a data store (sql injection) and then obtain a hash. If you just log in with a hash, then the attacker does not need to crack the recovered hash in order to gain access to the application.
Repeat attacks are also a problem. If I sniff a hash during authentication, what prevents me from simply reproducing this request for authentication?
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