At first glance I think that this is a fantastic idea. Provided that your password algorithm is unique enough and can be remembered (and applied) easily then it could be a great solution to both generating new passwords and retrieving existing passwords. But I see one problem with the password algorithm approach: logic.

Whilst having a password algorithm is something which would in some cases make it easier for you to create and remember passwords it also introduces a logical way of working them out. Sure, in order to know the password you’d have to firstly know the algorithm but this really just brings us back to the original problem. The whole reason for having a password is so that only people who know it can access the account – so in other words, your primary aim is to keep the password a secret. Using an algorithm approach, all you’re really doing is replacing the password with a method; you still have the same priority of keeping it a secret only this time it’s not just a single password for a specific site but potentially the key to unlocking all of your passwords.

So, to sum it up, what would you prefer? Would you prefer to disclose a single password for a single account or the algorithm to every password you have? For me the choice is clear – the more random, abstract and obscure, the better and more secure the password is.