Encryption in pics - why?

[rastan]

Question: If our pics can 'code protect' themselves, why would we want to encrypt [for example] a user password, when its not possible for a potential hacker to get the password of our chip anyway?

the reason i ask is because ive been trying to learn how encryption works. see the image below for possibly the best explanation of a simple encryption below. when reading this, the above sprang to mind. why do i need to encrypt something? how would someone be able to read a persons password? the answer is i dont know. anyone care to divulge?

cheers, phil