This password storage contract would be deployed on the blockchain and interactions with the contract, such as calling setPassword, would be publicly visible.
You have to make a call to setPassword to store your password. That call would be recorded on the blockchain.
Anyone could read your password in cleartext on the blockchain and then use it to login to whatever site or service the password secures. For example, if it was your banking password, they could drain your accounts. If it was your amazon password, they could buy stuff for themselves with your cards. They could also lock you out of your accounts by changing the password.
Manual review
VS Code
Encrypt your password locally and then upload the encrypted password to the contract. That way getPassword will return the encrypted password which you can decrypt locally. Don't upload a password in cleartext.
Private functions and state variables are only visible for the contract they are defined in and not in derived contracts. In this case private doesn't mean secret/confidential
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