changing wordpress password in phpmyadmin

By clicking user table in phpmyadmin the wordpress password can be changed for respective user. I have to do this for uploading the database in my test server xampp in windows.

Till now what I do is that – in the password field I put the new password and select MD5 which I have came to know from a site. But my curiosity is that in what encryption the wordpress password was saved previously when I installed and set password in the web server.

Currently in user table the user_pass field does not have any encryption selected. To let the new password work I have to put the new password and also select MD5. What other thing does wordpress use by default to save password?

Can anyone shade light on it? Thanks.