That's what the auth_crypt module is for.

For password encryption there is a module named auth_crypt: https://www.odoo.com/apps/trunk/auth_crypt/
Thus, password encryption is optional. Plain text passwords "might" be useful in development, as people from odoo say.

"Plain text passwords "might" be useful in development, as people from odoo say."
That is a rather ridiculous claim. It is a ridiculous idea to have users install a module to be able to hash passwords as opposed to enforcing this by default.

Yes, I also believe the default behaviour should be encrypted, with optional module to make it clear text (for development purposes, may be?). But the current situation is the described one.
So don't forget to use auth_crypt.

Oh yeah the example I gave was just for the admin user. You can also ofcourse do this:
somedb# select LOGIN , password from res_users;

Why has this issue been closed? Has their been a fix to the problem?

They shouldn't be encrypted, they should be hashed (encryption = atleast 1:1 ratio of password length the encrypted output length and is reversible, hashing will result in a fixed lenght and non reversible)

@xmo-odoo please explain to me how knowing passwords in development is of any use to a developer.

You should make it as easy as possible for people to succeed with your project, makign it so they need to remember to add security before pushing is just asking for cofiguration errors (people forgetting to add). Also, allot of people just don't understand password security.. So they won't ever get rid of plain text... Make it easy for people to succeed, hard to fail.

@kurtcoke

Why has this issue been closed? Has their been a fix to the problem?

The fix was always there (install auth_crypt), auth_crypt is automatically installed in v8 (since 5388eee)

@falconmick

They shouldn't be encrypted, they should be hashed

Cryptographic hashing is a subset of encryption, so are KDFs. In Odoo 8, auth_crypt defaults to pbkdf2_sha512 via passlib and this can be overridden with a different KDF if desired or necessary.

As far as I know it has never used a reversible encryption scheme, although it has historically used a weak KDF (md5crypt).

please explain to me how knowing passwords in development is of any use to a developer.

Why would I explain a position I never held?