PSN Security Update | Password Not Stored in Clear Text | PS3Blog.net
There was another update from Sony today. This one talked about how passwords where not stored in clear text which is a relief. They used a method called “Cryptographic hash function” which is a way to encode the password. They didn’t go into detail on which Algorithm they used though.
While the passwords that were stored were not “encrypted,” they were transformed using a cryptographic hash function. There is a difference between these two types of security measures which is why we said the passwords had not been encrypted. But I want to be very clear that the passwords were not stored in our database in cleartext form. For a description of the difference between encryption and hashing, follow this link.
Regardless, if you have used that password in other places be sure to change it just in case.