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Why does this site require cookies?

We could allow you to log in without cookies, but that would be a major security hazard. Someone could look over your shoulder without your knowledge and see the secret session ID at the top of your browser. If he entered that same session ID in his own browser, he would be logged in as you and could steal all your assets.

A cookie prevents that. A "shoulder surfer" might still see the session ID, but without the cookie value which is stored invisibly inside your browser, the session ID is useless.