Difference between Hashing a Password and Encrypting it

Hashing is a one way function (well, a mapping). It's irreversible, you apply the secure hash algorithm and you cannot get the original string back. The most you can do is to generate what's called "a collision", that is, finding a different string that provides the same hash. Cryptographically secure hash algorithms are designed to prevent the occurrence of collisions. You can attack a secure hash by the use of a rainbow table, which you can counteract by applying a salt to the hash before storing it.

Encrypting is a proper (two way) function. It's reversible, you can decrypt the mangled string to get original string if you have the key.

The unsafe functionality it's referring to is that if you encrypt the passwords, your application has the key stored somewhere and an attacker who gets access to your database (and/or code) can get the original passwords by getting both the key and the encrypted text, whereas with a hash it's impossible.

People usually say that if a cracker owns your database or your code he doesn't need a password, thus the difference is moot. This is naïve, because you still have the duty to protect your users' passwords, mainly because most of them do use the same password over and over again, exposing them to a greater risk by leaking their passwords.

Hashing is a one-way function, meaning that once you hash a password it is very difficult to get the original password back from the hash. Encryption is a two-way function, where it's much easier to get the original text back from the encrypted text.

Plain hashing is easily defeated using a dictionary attack, where an attacker just pre-hashes every word in a dictionary (or every combination of characters up to a certain length), then uses this new dictionary to look up hashed passwords. Using a unique random salt for each hashed password stored makes it much more difficult for an attacker to use this method. They would basically need to create a new unique dictionary for every salt value that you use, slowing down their attack terribly.

It's unsafe to store passwords using an encryption algorithm because if it's easier for the user or the administrator to get the original password back from the encrypted text, it's also easier for an attacker to do the same.

https://i.stack.imgur.com/TNdb1.png

As shown in the above image, if the password is encrypted it is always a hidden secret where someone can extract the plain text password. However when password is hashed, you are relaxed as there is hardly any method of recovering the password from the hash value.

Extracted from Encrypted vs Hashed Passwords - Which is better?

Is encryption good?

Plain text passwords can be encrypted using symmetric encryption algorithms like DES, AES or with any other algorithms and be stored inside the database. At the authentication (confirming the identity with user name and password), application will decrypt the encrypted password stored in database and compare with user provided password for equality. In this type of an password handling approach, even if someone get access to database tables the passwords will not be simply reusable. However there is a bad news in this approach as well. If somehow someone obtain the cryptographic algorithm along with the key used by your application, he/she will be able to view all the user passwords stored in your database by decryption. "This is the best option I got", a software developer may scream, but is there a better way?

Cryptographic hash function (one-way-only)

Yes there is, may be you have missed the point here. Did you notice that there is no requirement to decrypt and compare? If there is one-way-only conversion approach where the password can be converted into some converted-word, but the reverse operation (generation of password from converted-word) is impossible. Now even if someone gets access to the database, there is no way that the passwords be reproduced or extracted using the converted-words. In this approach, there will be hardly anyway that some could know your users' top secret passwords; and this will protect the users using the same password across multiple applications. What algorithms can be used for this approach?

I've always thought that Encryption can be converted both ways, in a way that the end value can bring you to original value and with Hashing you'll not be able to revert from the end result to the original value.

Hashing algorithms are usually cryptographic in nature, but the principal difference is that encryption is reversible through decryption, and hashing is not.

An encryption function typically takes input and produces encrypted output that is the same, or slightly larger size.

A hashing function takes input and produces a typically smaller output, typically of a fixed size as well.

While it isn't possible to take a hashed result and "dehash" it to get back the original input, you can typically brute-force your way to something that produces the same hash.

In other words, if a authentication scheme takes a password, hashes it, and compares it to a hashed version of the requires password, it might not be required that you actually know the original password, only its hash, and you can brute-force your way to something that will match, even if it's a different password.

Hashing functions are typically created to minimize the chance of collisions and make it hard to just calculate something that will produce the same hash as something else.

Hashing:

It is a one-way algorithm and once hashed can not rollback and this is its sweet point against encryption.

Encryption

If we perform encryption, there will a key to do this. If this key will be leaked all of your passwords could be decrypted easily.

On the other hand, even if your database will be hacked or your server admin took data from DB and you used hashed passwords, the hacker will not able to break these hashed passwords. This would actually practically impossible if we use hashing with proper salt and additional security with PBKDF2.

If you want to take a look at how should you write your hash functions, you can visit here.

There are many algorithms to perform hashing.

MD5 - Uses the Message Digest Algorithm 5 (MD5) hash function. The output hash is 128 bits in length. The MD5 algorithm was designed by Ron Rivest in the early 1990s and is not a preferred option today. SHA1 - Uses Security Hash Algorithm (SHA1) hash published in 1995. The output hash is 160 bits in length. Although most widely used, this is not a preferred option today. HMACSHA256, HMACSHA384, HMACSHA512 - Use the functions SHA-256, SHA-384, and SHA-512 of the SHA-2 family. SHA-2 was published in 2001. The output hash lengths are 256, 384, and 512 bits, respectively,as the hash functions’ names indicate.

Ideally you should do both.

First Hash the pass password for the one way security. Use a salt for extra security.

Then encrypt the hash to defend against dictionary attacks if your database of password hashes is compromised.

As correct as the other answers may be, in the context that the quote was in, hashing is a tool that may be used in securing information, encryption is a process that takes information and makes it very difficult for unauthorized people to read/use.

Here's one reason you may want to use one over the other - password retrieval.

If you only store a hash of a user's password, you can't offer a 'forgotten password' feature.