How do the similarity checks affect encryption/hashing of passwords?
To detect similaritys you would need access to the previous plaintext password.
1. Please think about crowd - https://confluence.atlassian.com/display/CROWD/Configuring+an+Internal+Directory
2.
https://confluence.atlassian.com/display/JIRA/Password+Policy+for+JIRA
https://marketplace.atlassian.com/plugins/com.intenso.confluence.plugins.confluence-password-policy
This doesn't answer my question in any way :-)
Your question is rather vague. Please expand on what you are asking.
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