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There is one advantage to the design: only the salt has to be synced, and only once. This means that you can transfer it securely, and you don't need to sync your password database, ever (which means there's not even a third party involved).

Something like this could actually help backport a limited form of two factor auth (something I know: password + something I have: salt) to single-password systems.

That's of course barring the crypto issues this algorithm has (see comment by anon081312) but maybe things could be improved on that front (not that I want to 'roll my own', but maybe this function could be designed better, and reviewed)




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