Passwords can be read from off-chain
As stated in the doc-strings of the contract, the intention is that nobody should be able to read the password of a user, as it is private. Although private variables can't be read by other contracts, they can be read from offchain by looking at the specific storage location where they are. So, this makes the passwords public, and not private, as per intended.
It makes the app unusable, as it defies one of the two main requirements (passwords should be only accessed by the owner).
Never store private information in a contract. If any, store proofs or hashed passwords.
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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