> Do you know how any other system manages to do this?  Linux, for example 
> assuming  properly configured system)?  The passwords aren't stored: hashes 
> of the passwords are stored (with additional things thrown in to prevent 
> certain kinds of attacks even if someone nabs the password (/etc/shadow) 
> file).  If you store the password or even encrypt it (i.e. something that can 
> be reversed if someone knows the key), it's a risk.

Ok, I understand it. What about the MD5? Is it good enough to use when
saving a hashed password on the database?

For example:
user_input = raw_input("Type your password: ")
password = md5.md5(user_input).hexdigest()
SavePasswordInDatabase(user,password)

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