Linux keep user account information in a text file called /etc/passwd. This file also stores one way encrypted password. It is accessed by several tools to get user information, which is a security risk, so file need to ‘Word Readable.’
To minimize the security risk, you can use shadow password format. This method saves account information in regular file /etc/passwd. However, the password is stored as a single “x” character (not actually stored in this file).
A second file, called “/etc/shadow” contains encrypted password as well as other information such as account or password expiration values, etc. The /etc/shadow file is readable only by the root account and is therefore less of a security risk