Hi,
Can anybody detail some approach on how to save private data in social websites like facebook, etc. They cant save all the updates and friends list in clear text format because of privacy issues. So how do they actually save it?
Hashing all the data with user password so that only a valid session view it is one possibility. But I think there are some problem with this approach and there must be some better solution.
Most applications do not encrypt data like this in the database. The password will usally be stored in a salted hash, and the application artchitecture is responsible for limiting visibility based on appropriate rights/roles.
They can and probably do save it in plain text - it goes into a database on a server somewhere. There aren't really privacy issues there... and even if there were, Facebook has publicly admitted they don't care about privacy.
Most websites do in fact save updates and friends list in clear text format---that is, they save them in an SQL database. If you are a facebook developer you can access the database using FQL, the Facebook Query Language. Queries are restricted so that you can only look at the data of "friends" or of people running your application, or their friends, or what have you. (The key difference between SQL and FQL is that you must always include a WHERE X=id where the X is a keyed column.)
There are other approaches, however. You can store information in a Bloom filter or in some kind of hash. You might want to read Peter Wayner's book Translucent Databases---he goes into clever approaches for storing data so that you can detect if it is present or missing, but you can't do brute force searches.