token_auth.rb

# We mix this in to our controllers
module Authenticatable
  extend ActiveSupport::Concern

  included do
    before_action :authenticate_user!
  end

  protected

  def authenticate_user!
    http_token = header_auth_token || params[:'auth-token']
    decoded = TokenService.decode http_token

    @current_user = User.find decoded&.dig(:user_id)
  rescue ActiveRecord::RecordNotFound
    raise Exceptions::TokenError, 'User not found'
  end

  private

  def header_auth_token
    request.headers['HTTP_AUTHORIZATION']&.split(' ')&.last
  end
end

# This is the service that actually does the JWT stuff
class TokenService
  def self.encode payload
    payload[:exp] ||= 24.hours.from_now.to_i
    JWT.encode(payload, secret, 'HS256')
  rescue
    raise Exceptions::TokenError, "Could not encode"
  end

  def self.decode token
    HashWithIndifferentAccess.new(JWT.decode(token, secret, true, algorithm: 'HS256')[0])
  rescue
    raise Exceptions::TokenError, "Could not decode"
  end

  def self.secret
    Rails.application.secrets.secret_key_base
  end
end

# This is what my base controller looks like
class Api::V2::ResourceController < JSONAPI::ResourceController
  include Pundit::ResourceController
  include Authenticatable

  before_action :set_default_response_format
  skip_before_action :verify_authenticity_token

  respond_to :json

  def set_default_response_format
    request.format ||= 'application/vnd.api+json'
  end
end

# This is what the auth controller looks like, that hands out tokens to clients
class Api::V2::AuthenticationController < ActionController::Base
  protect_from_forgery
  include ErrorHandler

  before_action :set_default_response_format

  def authenticate
    u = User.find_for_database_authentication(email: auth_params[:email])
    @user = u if u&.valid_password?(auth_params[:password])

    @token = TokenService.encode(user_id: @user.id) if @user

    if @token
      render json: { token: @token }
    else
      render json: { error: 'no way man' }, status: :unauthorized
    end
  end
end