Password hashing is one of the most basic security considerations that must be made when designing any application that accepts passwords from users. Without hashing, any passwords that are stored in your application's database can be stolen if the database is compromised, and then immediately used to compromise not only your application, but also the accounts of your users on other services, if they do not use unique passwords.
By applying a hashing algorithm to your user's passwords before storing them in your database, you make it implausible for any attacker to determine the original password, while still being able to compare the resulting hash to the original password in the future.
It is important to note, however, that hashing passwords only protects them from being compromised in your data store, but does not necessarily protect them from being intercepted by malicious code injected into your application itself.
Posted in: PHP