Another method, which is somewhat less secure, but not feasibly compromised without privileged knowledge, is to encrypt the drive or partition containing password hashes. Specifically, the partition or physical drive containing the /etc/shadow file must be encrypted.
The partition managers in most modern versions of Linux now include the ability to encrypt volumes upon creation, but as mentioned earlier, special configurations and kernel patches must be made to encrypt system partitions.
The following is a link to an excellent How-To by David Braun providing steps on setting up an entire encrypted Linux installation from scratch in the 2.4 kernel: http://tldp .org/HOWTO/html_single/Disk-Encryption-HOWTO.
Additionally, Boyd Waters continued David Braun's work, but using the 2.6 kernel and wrote another excellent white paper. This white paper can be accessed at the following link: http://www.sdc.org/~leila/usb-dongle/readme.html.
With the exception of successfully brute-forcing the password for the encrypted drive or gaining the drive or partition encryption password through social engineering or a hardware keystroke logger, attackers can very little do once this obstacle is encountered. Although they may have obtained the machine itself, the data on the machine is effectively unusable.
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