diff --git a/README.md b/README.md
index fd1db053..6603eebe 100644
--- a/README.md
+++ b/README.md
@@ -17,7 +17,7 @@ Devise is a flexible authentication solution for Rails based on Warden. It:
 
 It's composed of 10 modules:
 
-* [Database Authenticatable](http://rubydoc.info/github/plataformatec/devise/master/Devise/Models/DatabaseAuthenticatable): encrypts and stores a password in the database to validate the authenticity of a user while signing in. The authentication can be done both through POST requests or HTTP Basic Authentication.
+* [Database Authenticatable](http://rubydoc.info/github/plataformatec/devise/master/Devise/Models/DatabaseAuthenticatable): hashes and stores a password in the database to validate the authenticity of a user while signing in. The authentication can be done both through POST requests or HTTP Basic Authentication.
 * [Omniauthable](http://rubydoc.info/github/plataformatec/devise/master/Devise/Models/Omniauthable): adds OmniAuth (https://github.com/intridea/omniauth) support.
 * [Confirmable](http://rubydoc.info/github/plataformatec/devise/master/Devise/Models/Confirmable): sends emails with confirmation instructions and verifies whether an account is already confirmed during sign in.
 * [Recoverable](http://rubydoc.info/github/plataformatec/devise/master/Devise/Models/Recoverable): resets the user password and sends reset instructions.
@@ -174,7 +174,7 @@ member_session
 
 ### Configuring Models
 
-The Devise method in your models also accepts some options to configure its modules. For example, you can choose the cost of the encryption algorithm with:
+The Devise method in your models also accepts some options to configure its modules. For example, you can choose the cost of the hashing algorithm with:
 
 ```ruby
 devise :database_authenticatable, :registerable, :confirmable, :recoverable, stretches: 20
diff --git a/lib/devise.rb b/lib/devise.rb
index 4652c1ab..dca9af6c 100644
--- a/lib/devise.rb
+++ b/lib/devise.rb
@@ -61,7 +61,7 @@ module Devise
   mattr_accessor :rememberable_options
   @@rememberable_options = {}
 
-  # The number of times to encrypt password.
+  # The number of times to hash the password.
   mattr_accessor :stretches
   @@stretches = 10
 
@@ -146,7 +146,7 @@ module Devise
   mattr_accessor :timeout_in
   @@timeout_in = 30.minutes
 
-  # Used to encrypt password. Please generate one with rake secret.
+  # Used to hash the password. Please generate one with rake secret.
   mattr_accessor :pepper
   @@pepper = nil
 
diff --git a/lib/devise/encryptor.rb b/lib/devise/encryptor.rb
index 751db106..19651d7b 100644
--- a/lib/devise/encryptor.rb
+++ b/lib/devise/encryptor.rb
@@ -9,14 +9,14 @@ module Devise
       ::BCrypt::Password.create(password, cost: klass.stretches).to_s
     end
 
-    def self.compare(klass, encrypted_password, password)
-      return false if encrypted_password.blank?
-      bcrypt   = ::BCrypt::Password.new(encrypted_password)
+    def self.compare(klass, hashed_password, password)
+      return false if hashed_password.blank?
+      bcrypt   = ::BCrypt::Password.new(hashed_password)
       if klass.pepper.present?
         password = "#{password}#{klass.pepper}"
       end
       password = ::BCrypt::Engine.hash_secret(password, bcrypt.salt)
-      Devise.secure_compare(password, encrypted_password)
+      Devise.secure_compare(password, hashed_password)
     end
   end
 end
diff --git a/lib/devise/models/database_authenticatable.rb b/lib/devise/models/database_authenticatable.rb
index 27a8646d..2816a813 100644
--- a/lib/devise/models/database_authenticatable.rb
+++ b/lib/devise/models/database_authenticatable.rb
@@ -7,8 +7,8 @@ module Devise
   end
 
   module Models
-    # Authenticatable Module, responsible for encrypting password and validating
-    # authenticity of a user while signing in.
+    # Authenticatable Module, responsible for hashing the password and
+    # validating the authenticity of a user while signing in.
     #
     # == Options
     #
@@ -37,7 +37,9 @@ module Devise
         [:encrypted_password] + klass.authentication_keys
       end
 
-      # Generates password encryption based on the given value.
+      # Generates a hashed password based on the given value.
+      # For legacy reasons, we use `encrypted_password` to store
+      # the hashed password.
       def password=(new_password)
         attribute_will_change! 'password'
         @password = new_password
@@ -142,11 +144,11 @@ module Devise
 
     protected
 
-      # Digests the password using bcrypt. Custom encryption should override
+      # Hashes the password using bcrypt. Custom hash functions should override
       # this method to apply their own algorithm.
       #
       # See https://github.com/plataformatec/devise-encryptable for examples
-      # of other encryption engines.
+      # of other hashing engines.
       def password_digest(password)
         Devise::Encryptor.digest(self.class, password)
       end
diff --git a/lib/devise/strategies/database_authenticatable.rb b/lib/devise/strategies/database_authenticatable.rb
index 42880acf..3d8f4072 100644
--- a/lib/devise/strategies/database_authenticatable.rb
+++ b/lib/devise/strategies/database_authenticatable.rb
@@ -6,15 +6,15 @@ module Devise
     class DatabaseAuthenticatable < Authenticatable
       def authenticate!
         resource  = password.present? && mapping.to.find_for_database_authentication(authentication_hash)
-        encrypted = false
+        hashed = false
 
-        if validate(resource){ encrypted = true; resource.valid_password?(password) }
+        if validate(resource){ hashed = true; resource.valid_password?(password) }
           remember_me(resource)
           resource.after_database_authentication
           success!(resource)
         end
 
-        mapping.to.new.password = password if !encrypted && Devise.paranoid
+        mapping.to.new.password = password if !hashed && Devise.paranoid
         fail(:not_found_in_database) unless resource
       end
     end
diff --git a/lib/generators/templates/devise.rb b/lib/generators/templates/devise.rb
index 818eebe5..64a22c89 100644
--- a/lib/generators/templates/devise.rb
+++ b/lib/generators/templates/devise.rb
@@ -92,16 +92,16 @@ Devise.setup do |config|
 
   # ==> Configuration for :database_authenticatable
   # For bcrypt, this is the cost for hashing the password and defaults to 10. If
-  # using other encryptors, it sets how many times you want the password re-encrypted.
+  # using other algorithms, it sets how many times you want the password to be hashed.
   #
   # Limiting the stretches to just one in testing will increase the performance of
   # your test suite dramatically. However, it is STRONGLY RECOMMENDED to not use
   # a value less than 10 in other environments. Note that, for bcrypt (the default
-  # encryptor), the cost increases exponentially with the number of stretches (e.g.
+  # algorithm), the cost increases exponentially with the number of stretches (e.g.
   # a value of 20 is already extremely slow: approx. 60 seconds for 1 calculation).
   config.stretches = Rails.env.test? ? 1 : 10
 
-  # Set up a pepper to generate the encrypted password.
+  # Set up a pepper to generate the hashed password.
   # config.pepper = '<%= SecureRandom.hex(64) %>'
 
   # Send a notification email when the user's password is changed
@@ -201,11 +201,11 @@ Devise.setup do |config|
   # config.sign_in_after_reset_password = true
 
   # ==> Configuration for :encryptable
-  # Allow you to use another encryption algorithm besides bcrypt (default). You can use
-  # :sha1, :sha512 or encryptors from others authentication tools as :clearance_sha1,
-  # :authlogic_sha512 (then you should set stretches above to 20 for default behavior)
-  # and :restful_authentication_sha1 (then you should set stretches to 10, and copy
-  # REST_AUTH_SITE_KEY to pepper).
+  # Allow you to use another hashing or encryption algorithm besides bcrypt (default).
+  # You can use :sha1, :sha512 or algorithms from others authentication tools as
+  # :clearance_sha1, :authlogic_sha512 (then you should set stretches above to 20
+  # for default behavior) and :restful_authentication_sha1 (then you should set
+  # stretches to 10, and copy REST_AUTH_SITE_KEY to pepper).
   #
   # Require the `devise-encryptable` gem when using anything other than bcrypt
   # config.encryptor = :sha512
diff --git a/test/models/database_authenticatable_test.rb b/test/models/database_authenticatable_test.rb
index 5daca424..8c12d93c 100644
--- a/test/models/database_authenticatable_test.rb
+++ b/test/models/database_authenticatable_test.rb
@@ -92,28 +92,28 @@ class DatabaseAuthenticatableTest < ActiveSupport::TestCase
     assert user.respond_to?(:password_confirmation)
   end
 
-  test 'should generate encrypted password while setting password' do
+  test 'should generate a hashed password while setting password' do
     user = new_user
     assert_present user.encrypted_password
   end
 
-  test 'should support custom encryption methods' do
-    user = UserWithCustomEncryption.new(password: '654321')
+  test 'should support custom hashing methods' do
+    user = UserWithCustomHashing.new(password: '654321')
     assert_equal user.encrypted_password, '123456'
   end
 
-  test 'allow authenticatable_salt to work even with nil encrypted password' do
+  test 'allow authenticatable_salt to work even with nil hashed password' do
     user = User.new
     user.encrypted_password = nil
     assert_nil user.authenticatable_salt
   end
 
-  test 'should not generate encrypted password if password is blank' do
+  test 'should not generate a hashed password if password is blank' do
     assert_blank new_user(password: nil).encrypted_password
     assert_blank new_user(password: '').encrypted_password
   end
 
-  test 'should encrypt password again if password has changed' do
+  test 'should hash password again if password has changed' do
     user = create_user
     encrypted_password = user.encrypted_password
     user.password = user.password_confirmation = 'new_password'
diff --git a/test/test_models.rb b/test/test_models.rb
index 3c1f1787..d65648d9 100644
--- a/test/test_models.rb
+++ b/test/test_models.rb
@@ -12,7 +12,7 @@ class UserWithValidation < User
   validates_presence_of :username
 end
 
-class UserWithCustomEncryption < User
+class UserWithCustomHashing < User
   protected
   def password_digest(password)
     password.reverse