Earlier quoted context omitted.
Making something closed source does not make your product more secure, it only makes it harder to look at. Determined people will still try to understand how your software works in order to accomplish their goals.
Hashing passwords is security through obscurity by that reasoning. That does not make them less of a security function. Just something to keep in mind.
For example, if your way to encrypt works like this:
1) Shift all letters along by 5.
2) Cut out every second word and put them behind the message in order.
3) Whenever there's an f, s or y in a word, double up that word and shift the second word's letters by 7.
Then if your enemy figures out how your method works, you have to come up with a completely different method.
The opposite to security by obscurity would instead once come up with a method that entirely depends on a key. You can then publicize that method (or not), and if your enemy finds out your key, you just choose a new key and you're fine again.