Hi David,

The master password from your Odoo instance will be automatically encrypted if you enter it through the frontend of Odoo. If you go go https://yourwebsite.com/web/database/manager and set the master password there it will go through Odoo and Odoo will do a one-way encryption. This encryption cannot be reverse engineered and will be stored in a safe and hashed way in the configuration file.
If you set it manually in the configuration file it will NOT be encrypted and will be humanly readable. If you do not want to set the master password through the frontend and want to manually add a master password in the configuration file you should first encrypt it before putting it in the configuration file.

P.S: Answering here too because of https://github.com/odoo/odoo/issues/31836

Regards,
Yenthe