service password-encryption applies weak, reversible encryption to the enable password and other configured passwords. Cisco identifies the resulting credentials as type 7. Unlike hashing, encryption can be reversed, and type 7 passwords can be easily decrypted with free online tools. section 11.3.1
Use these distinctions when configuring Cisco IOS passwords:
- enable password stores a type 0 password in cleartext unless service password-encryption is applied. section 11.3.1
- service password-encryption changes such passwords to type 7, but does not provide secure, irreversible storage. section 11.3.1
- Prefer enable secret, which stores a secure hash using a supported algorithm such as MD5, SHA-256, or scrypt. section 11.3.1

