A user has reported that the wifi passwords are not encrypted on Ubuntu systems, being stored in clear text in a folder outside the user’s home, (/etc/NetworkManager/system-connections/) making it accessible for unwanted users.
After this issue has been reported, a Canonical developer has explained in the mailing lists that this is caused by the fact that the “All users may connect to this network” option is enabled by default.
This issue has an easy fix, directly from the graphical user interface. All you have to do is: Open network indicator -> Edit connections -> Select network -> Click edit -> untick “All users may connect to this network.” from the general tab.
By doing this setting, the password will be stored in the user’s home and so, it will become unavailable for unwanted users. Also, encrypt your homedir, for better security.