When a system must go from a powered down state to a fully operational state without any human intervention it therefore needs access to usable authentication credentials unattended. The system must recover and boot automatically without human intervention so the credentials must be stored in a readable format on the file-system.
We hear about passwords being hashed(+salted) at rest and encrypted in transmission but is encoding acceptable under the above scenario? For instance I was reading an article about WebSphere where they encode their system passwords using XOR and base64 and consider it as the best option.
Is encoding the best option for cases like this?