The password transmitted in clear text and can be seen by anyone.
In the setPassword function, the password is transmitted in clear text, so anyone looking at the transaction details (for example with etherscan) can see the password's value.
etherscan or any chain explorer
The password can be stored just as a hash, or can be stored encrypted.
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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