In most video games of the 8 and 16-bit eras, after a level was beaten and/or when all continues were wasted, the game would display a password, that when entered in the game would allow the player to return back to this part in the game. The password was used in cartridge based systems generally to lower costs, since the memory card was built in to the cartridge, often doubling the manufacturing cost. Passwords helped to keep production costs down on low volume titles by smaller third party developers. With the advent of optical based media, even larger companies now could not store data directly to the game media, requiring the introduction of non-volatile memory to the console either in the form of internal memory or memory cards (both of which were introduced with the Sega CD) which stored game data once the system was powered off. Some modern video games still use passwords as a homage to the early days of gaming, or to conserve memory blocks due to the lack of data being saved, and the commodity status placed upon the small number of memory blocks on PlayStation one memory cards. Platform and puzzle games are famous for this, as often the only data required is the level achieved, thus not needing to waste 1/15th of a memory card.

Complexity of passwords

The complexity of passwords depends mostly on the number of variables stored. While games that only require the stage variable to be stored, a single word, with or without meaning, is sufficient (in Pete Sampras Tennis, which only store the stage number since no stats are carried from each match and the player can select a different player any time, passwords are simple words) to complex, often based on several characters combined by an algorithm. While it is possible to translate saves into passwords even from the most complex titles, the practical use of them is very questionable. In games such as RPGs, where dozens of stats have to be stored, passwords would be hundreds of characters long.

Usually, the size and complexity of the password does not make "guessing" a valid password practical. However, particularly in the case of algorithmic passwords, a password can be found (such as the famous JUSTIN BAILEY code from Metroid).

Advantages and disadvantages

Although passwords are seen as arcane for modern standards, they still carry a number of advantages over memory saving, including:

• Portability of passwords: they can be carried over any medium without requiring extra accessories such as memory cards or similar memory transfer media. In the cartridge-based games, it's also possible to continue playing in different cartridges, without losing progress changing between them.
• Always work: while saved media is prone to corruption, passwords (as long as the media is kept safe) will always work. Some cartridges with built-in backup batteries manufactured in the golden age of 16-bit consoles (between 1990 and 1995) also have their batteries worn by now due to overuse, and more recently, users of PlayStation Memory Cards could lose progress in a game if the card was physically damaged or had some kind of interference that corrupted data while operating.
• Resume anytime: in console games (until the Hard drive based Xbox appeared), there is a limited space that can be used to store games, which can become a problem, particularly in sports games: if a player wants to keep a list of final matches, he needs to acquire a new memory card for each handful of finals. With passwords, although no other statistics are saved, this problem does not exist.
• Independent of version: While in some games installing a patch can render all previously saved games unusable, unless the algorythm behind the password generation is changed, they will always work.

There are, however, several disadvantages:

• Separate media: the media used to store passwords, usually a piece of paper, a corner or a blank page of the manual, if not kept properly, is suitable of being lost. Ink can fade away, pages can be lost, etc.
• Complexity and require human input: some passwords, even for older games, could be over 20 characters long. Not only are they hard and take time to input, a single error transcribing the password from the screen to the paper could mean a lost password. There can also be interpretation errors, such as confusing 0 (the number zero) and O (the letter "O"), although these can be fixed provided the player looks into it. Some of the later games only had non-ambiguous characters to overcome this problem.
• Less variables stored: Considering the complexity limit, passwords can't hold more than a few variables, which means variable oriented games such as RPGs and racing games aren't practicable, sports games are stripped of statistics and strategy games would have to be organized into levels which had to be completed in one sitting. It also makes saving mid-level impossible.
• No records: it is also impossible to save records of the game: fastest run in a level, highest score, user statistics, fastest lap, total time played, etc.

In recent games, the use of passwords for saving progress has been replaced by saves, while passwords have taken on a slightly different role of adding in extra characters, vehicles, or weapons; these are usually referred to as cheat codes. For example, in Animal Crossing, passwords are used for giving items to friends; players could trade in an item for a password, and their friend can enter in the password to receive that same item.