The passwords are not stored anywhere on the system at all. What is stored in
/etc/shadow are so called hashes of the passwords.
A hash of some text is created by performing a so called one way function on the text (password), thus creating a string to check against. By design it is "impossible" (computationally infeasible) to reverse that process.
Older Unix variants stored the encrypted passwords in
/etc/passwd along with other information about each account.
Newer ones simply have a
* in the relevant field in
/etc/passwd and use
/etc/shadow to store the password, in part to ensure nobody gets read access to the passwords when they only need the other stuff (
shadow is usually protected more strongly than
For more info consult