Step 2: Install OpenSSH (from Cydia)
Launch Cydia from your SpringBoard and wait for it to load. If it is your first time opening Cydia, it will ask you to classify yourself. Choose 'Hacker'; if you choose 'User', you will not be able to install OpenSSH unless you change your settings. When it finished loading completely (the black bar at the top will disappear when it is done; it may take a while), go to the 'Search' tab and search for 'OpenSSH'. If the package appears, tap it. If it doesn't, then your type is set to User; to fix this, go to the 'Manage' tab and tap 'Settings' in the upper-left corner, select 'Hacker', and then go back and retry your search. Once the page for OpenSSH loads, tap 'Install' in the upper-right corner, and when the next page loads, tap the 'Confirm' button, which will be in exactly the same spot. (If the button in the upper-right says 'Modify' instead of 'Install', then you already have OpenSSH installed and you can skip to the next step. It says 'Modify' in the screenshot because OpenSSH is already installed on the device used for the screenshot.) A new screen will appear with text and a progress bar. Wait for it to do its thing, then tap the large button at the bottom when it becomes available. It will be labeled either 'Return to Cydia' or 'Restart SpringBoard'. You have now installed OpenSSH and can connect to your iPhone.
However, so can anyone else. You will want to change your password from the default, 'alpine'. To do this you will need to either SSH into your device or use MobileTerminal. If you want to use terminal directly on your device, download MobileTerminal from Cydia and launch it. To SSH into your iPhone, follow the next three steps to create a P2P network and join the network with your iPhone, and then SSH in to execute commands. Once in, if you are using MobileTerminal, type 'su root' and press enter to temporarily assume root privileges. (If you are using SSH, you already have root privileges.) You will be asked to enter your password; since you haven't changed it yet, it will be 'alpine'. Type it in and press enter; nothing will appear as you type, but your text is still being entered. Now that you have root permissions, type 'passwd' and press enter, and type in your current password ('alpine'), and then the new password twice (press enter after each). You have now changed the root password. You will also want to change the password for mobile, so type 'passwd mobile' and press enter. Again put in 'alpine' and then the new password twice. (It does not have to be the same as the root password, and in fact doesn't matter much at all, as long as it's not 'alpine'.) When you are finished, type 'exit' and press enter.