LastPass combines an application you install and an online service hosting your passwords (encrypted) letting you use them from whatever location you happen to be. All you need is to remember or save locally a master password.

Having all this sensitive information away from my PC made me feel insecure, and I still believe that this should be optional, not obligatory. However, according to LastPass all encryption and decryption occurs locally, so that sensitive data won’t travel over the Internet but only encrypted. The encryption algorithm is that of the US Government for Top Secret data. The encryption key is created from a user’s email address and password. The components that make up the decryption key remain local, which also means that if you lose or forget your master password  LastPass can do nothing to help you decrypt your data.

LastPass imports passwords currently on your system (including browsers). The easiest way to add new sites to LastPass is to simply go to the site and login as you typically would. LastPass will present you with an Add Site option, where you can specify a friendly name for the account (it is pre-populated with the domain name) and you can also type or select a group for this account.

By assigning groups to each of your sites, it will allow you to organize your accounts by categories. Some examples of groups are Financial, Shopping, Social Networks, etc. If you have an existing account at this site stored in LastPass, you will also see an option to replace the existing site with the new login information. After you choose to save the site, LastPass will store your encrypted data and will automatically fill in this information the next time you visit the site.

LastPass gives you also tools to generate secure, non-guessable passwords. When it detects that you are being asked to provide a new password, it will pop the notification bar to offer to generate a password for you. This password is random and is non-guessable. You can then use the Accept button to auto-populate the password fields in the form. When you accept the generated password, LastPass also saves this securely in your account in case you do not get a chance to add the new site to your Lastpass account.