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Definition
Password encryption is the process of transforming a password into an unreadable format using cryptographic algorithms so it cannot be understood if accessed by unauthorized parties. Encrypted passwords are protected using keys and are only readable when properly decrypted or validated.

Why it matters
Password encryption protects user credentials from being exposed during data breaches or system compromises. Without encryption, stolen passwords can be immediately misused, leading to account takeovers, fraud, and large scale security incidents.

Example use case
When a user creates an account, their password is encrypted before being stored in the database. If the database is breached, attackers cannot read the original passwords in plain text.