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I was proposed to save a password in gnome-shell @ 12.04 using Gigolo:

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Where exactly are these passwords saved and how are they encrypted?

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Gigolo doesn't store the password itself, rather it uses gnome-keyring to store them. Following is the quote from Gigolo's Help Document

There is no support for direct storing of passwords at all in Gigolo. Instead by using GVfs we get support for gnome-keyring for free. All you have to do is to install the gnome-keyring package (and maybe restart your session). The next time you connect to a resource which requires a password, Gigolo will ask you for it as usual and then the entered password is stored in the keyring for this connection. Currently, your password is stored forever. This will be configurable in future versions to store it only per session or to not store it at all.

Now coming to GnomeKeyring:

  1. Where does it stores the passwords?

    It stores the password in keyrings folder:

    • In Ubuntu 12.10, it is located at ~/.local/share/keyrings/
    • In Ubuntu 12.04 and earlier, it is located at ~/.gnome2/keyrings/
  2. How are these passwords encrypted?

    Quoting from GnomeKeyring's Security FAQs:

    SHA-256 for hashing, AES-128 for encrypting the secrets.

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