Working with users and groups
From Oxxus Wiki
Users on the Linux system can usually use all the services that are running on the server. That includes FTP, SSH, mail and so on. Users are added to /etc/passwd file and their passwords are encrypted and stored in /etc/shadow. Linux/Unix systems use one-way encryption, so passwords are usually considered safe and cannot be easily decrypted. Each time a user logs in, passwords are hashed with one of hashing algorithms with predefined random salt and stored in protected file on the system.
To add a user, just type:
User mike (example) is added on the system and his group mike is created. His home folder is created in /home and he can SSH to the system and use FTP/mail services. To set a password for mike you need to type:
It's a good practice to use only lower case characters on Linux, as it's case sensitive and emails might not work if you use upper case characters in the username. Please be aware that various people are scanning networks and probing for simple passwords, so use at least 8 characters password and always include at least one number, punctuation and upper case letter. This qualifies as a stronger password and will help you avoid your Linux server being hacked.