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If you are doing this isn't it pretty much the same as encrypting it with a key?

encryption is non-deterministic

Some encryption algorithms are (effectively, but not literally) non-deterministic, e.g.: DUKPT, RSA-OAEP

Most encryption algorithms are deterministic, and most password authentication schemes depend on that fact.

Passwords aren't encrypted, so why would deterministic encryption matter?

Err, yes, good point. And if I had read the article first, I would have had the proper context of technical specificity loaded before commenting.

Nevertheless, most encryption algorithms are deterministic. :)