The service password-encryption command is used to encrypt all passwords in the router configuration file, such as the enable password, the console password, the vty password, and the username password. This command prevents credentials from being seen if the router configuration was compromised, for example, by an attacker who gained access to the router or the backup files. The encryption used by this command is a weak algorithm that can be easily reversed, but it provides some level of protection against casual observers1.
The other commands are not used to encrypt passwords in the router configuration file. The username
<username> privilege 15 password <password> and the username <username> password <password> commands are used to create local user accounts with or without administrative privileges, respectively. These commands store the passwords in clear text unless the service password-encryption command is enabled2. The service password-recovery command is used to enable or disable the password recovery mechanism on the router. This command does not affect the encryption of passwords in the configuration file3.
References := 1: Implementing and Operating Cisco Security Core Technologies (SCOR) v1.0, Module 1:
Security Concepts, Lesson 1.2: Securing Network Devices, Topic 1.2.1: Device Hardening, page 1-14. 2:
Implementing and Operating Cisco Security Core Technologies (SCOR) v1.0, Module 1: Security Concepts, Lesson 1.2: Securing Network Devices, Topic 1.2.2: Management Plane Security, page 1-17. 3: Cisco IOS Configuration Fundamentals Command Reference, Release 12.2, Chapter: service password-recovery, page 1.