Overview

Using clear text passwords in your settings.xml file, which is Maven's default, is a security hole.
This situation only gets worse if you use LDAP or other authentication integration, since you expose your SSO password in clear and that password is likely to be used for other services, not just Artifactory.

Using Maven's built-in support for encrypted passwords, by generating passwords on the client side doesn't make the situation any better:

Login password is decrypted on the client side and ends up in clear text in memory, and when transmitted over the wire (unless forcing SSL too).
The master password used for decryption is stored in clear text on the file system.
Password encryption is left to the good will of the end-user and there is no way to centrally mandate it.

Artifactory provides a unique solution to this problem by generating encrypted passwords for users based on secret keys stored in Artifactory itself. By this, you can ensure users shared passwords are never stored or transmitted as clear text.
You can also set a central policy for using or accepting encrypted passwords, from Admin:Security:General:

Using Your Secure Password

Get into your profile page (click on your login name on the upper-right corner) and type-in your current password.
Once you enter a correct password you will see your password in the Encrypted Password field.
Copy this value (including the {...} prefix) or use the sample server xml snippet in your settings.xml (you'd have to change the server name to match the id of your repository).

Centrally Secure Passwords

Overview

Using Your Secure Password