Everyone of us have an online account with so many services, like social networking, e-commerce, and email. This list is increasing day by day. Keeping minimum 8 character password with (symbols+alphanumeric code) has become a norm.
How do we remember all the passwords, for different service ?
A quick but very risky solution is to keep the same password for all services. Keeping the same password is like using the same key for all the locks. If one service is hacked, then the hacker might try the same password for other services too. This has happened before --
eBay Inc. To Ask eBay Users To Change Passwords
Sony Got Hacked Hard: What We Know and Don’t Know So Far
Another easy but cumbersome solution is to use password managers like KeePass. But again you need to manually enter password for every service, and take the encrypted password database file to where ever you need it.
There is now an elegant, open source and very secure way to have different and difficult passwords for every website, without the need to store them.
Mozilla Firefox Addon
How it works
One way hash functions like MD5, SHA are used to hash domain name with your master key to generate unique password. Thus using single master key, unique password can be generated for different websites.