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I'm just curious because I know the configuration for the password is located in /etc/passwd, but in the document I don't see my actual password anywhere, obviously for security reasons. I opened passwd- with less in the terminal and it can't be found there either.

How does Ubuntu know and read the password you give it?

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The password is not in /etc/password file in Unix systems ... some decades ago :)

The same policy is applied in Linux (Ubuntu too). Your passwords are encrypted in /etc/shadow file, and you need to be root to read the file. The passwords in /etc/shadow are hashed and this is an one-way operation. Ok, you will need (1) the string used for hash operation and (2) the hash algorithm used, and you can will try decrypt the /etc/shadow file (and remember, you will need root permissions for read this file).

You can find more details in this answer:

How to decode the hash password in ./etc/shadow

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Passwords are stored in /etc/shadow. They are encrypted. Integrity of /etc/passwd and /etc/shadow can be verified via pwck command:

pwck -r /etc/passwd
pwck -r /etc/shadow

Passwords were once storred in /etc/passwd, but then they were moved to /etc/shadow to restrict access – while /etc/passwd can be read by any user, /etc/shadow is accessible only by root by default.

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