Enable authentication on postfix

i have installed postfix on ubuntu server 14.04.4. i am able to telnet to the server as send emails from my smtp server. but since there is no authentication needed for this everybody is having access to the server. so,

  1. how to setup authentication. i would like username password way
  2. can i use local ubuntu account use for the authentication.

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Append these lines in /etc/postfix/ and restart postfix service.

smtp_tls_auth_only = yes smtp_tls_security_level = encrypt

The email messages i’ll be encrypted as TLS and verified by your hostname.