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The FireFox master password is used to protect the master key for the FireFox browser on your computer. The master key is used to encrypt email passwords, web site passwords, and other potentially sensitive information stored by the Form and Password Manager on your computer.
Answer Wiki. Imagine you need to authenticate users on a website using a password. The most obvious solution is to store the raw password in a file and compare that to the password they've entered. This has the problem that any breach of the password file reveals the user's real passwords.