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A careful examination of the /etc/passwd and /etc/shadow files reveal that the passwords stored are hashed using some form of hashing function.

A quick Google search reveals that by default, the passwords are encrypted using DES. If an entry begins with $, then it indicates that some other hashing function was used.

For example, some entries on my Ubuntu machine begin with $6$...

What do the various numbers represent?

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up vote 16 down vote accepted

The full list is in man 3 crypt (web version):

          ID  | Method
          -------------------------------------------------
          1   | MD5
          2a  | Blowfish (on some Linux distributions)
          5   | SHA-256 (since glibc 2.7)
          6   | SHA-512 (since glibc 2.7)

(Blowfish can be either $2$ or $2a$ according to Wikipedia Crypt (Unix).)

So $6$ means SHA-512.

Which one your system uses is governed by any options passed to the pam_unix PAM module.

The default on the latest version of Ubuntu is set in /etc/pam.d/common-password:

password        [success=1 default=ignore]      pam_unix.so obscure sha512

which means that next time you change your password, it will be hashed using SHA-512, assuming your account is local, rather than NIS/LDAP/Kerberos, etc.

See also:

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A quick double check of my /etc/shadow shows 2 entries that start with $6$. –  Nathan Osman Feb 26 '11 at 2:23
    
Note that SHA-256 and SHA-512 are part of the SHA-2 set of hash functions. –  mattdm Feb 26 '11 at 2:33
2  
Note that the crypt hashes based on SHA-2 are not plain SHA-2, which would be bad since plain SHA-2 is weak against dictionary attacks. The SHA-2 crypt schemes use the plain hashes as building block, but add a variable work-factor(to slow down dictionary attacks) and a salt. –  CodesInChaos Jun 18 '12 at 18:39
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