Perhaps you’ve heard that you should not reuse passwords but don’t understand why. After all, you have a really good password, one that nobody would ever guess, so why not use it everywhere?
Your password is not as good as you think
First of all, people who think they have a really good password are usually wrong. They implicitly assume that an attacker would have to recreate the devious process they went through to create the password. This is not the case. A password needs to be hard for an attacker to crack, not hard for the owner to create, and these are not the same thing. The former requires passwords that are long and randomly generated.
Credential stuffing
Suppose you use the same password on sites X and Y. Then site X gets hacked, revealing your password. Now your user name (most likely your email address) and password is part of a list posted online somewhere. Hackers then use scripts to see whether the same credentials will work somewhere else, and they often do. If they try site Y, then your account on Y has been compromised as well.
Now suppose you use a different username at the two sites. This is better, but the hack on X still means that your password has been added to a list of known passwords.
The worst case scenario is a site that stores passwords in the clear. This practice has long been discouraged, but the more times you reuse a password, the higher the chance that you’ll use your password at a site that does not hash passwords.
Hashing
Most sites these days don’t store your password per se but a cryptographic hash of your password. When you enter your password, the site hashes it and compares the result to the hashed value it has on file. If they match, you’re in.
If your hashed password for X is part of a breach, and the hashing algorithms for X and Y known, an attacker can try hashing a list of known passwords and maybe one of them will match the hash of your password on Y.
If sites X and Y use different hashing algorithms, then a hash of your password for X is not directly useful to hacking your account on site Y. But it is possible to “unhash” passwords, especially if a site uses a hashing algorithm that has been broken. This takes a lot of computation, but people do it.
Example
This is not hypothetical. It has happened many times. For example, it was part of what lead to the recent 23andMe breach. And when a hacker obtains one person’s family tree data, they obtain data on many other people at the same time. If you used a unique, long, randomly generated password on 23andMe but your cousin used password123, then your data may have been stolen.
What to do?
What can you do? You almost have to use a password manager. A strong password is necessarily hard to remember, and memorizing hundreds of strong passwords would be quite a chore. Still, you might want to memorize one or two strong passwords if they protect something really valuable.