Creating New Users in RH 7.1

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Hello,
This is what worked for me to create new users in rh 7.1. As root, type
adduser username
the directory /home/username was created with the default files and an
entry was created in the /etc/passwd file. Next type:
passwd username
also as root. You can then enter the password you want for the new user.
That's all there is to it.
This brings me to a question about the passwd file. I don't see any actual
passwords or anything that could be encrypted passwords, in it. Where are
they stored?
Thanks.
John






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