What encryption does Asp.net Identity use?

Uses a Key Derivation Function , as specification of RFC 2898 . The process is quite intricate and guarantees a secure password.

Encoding:

public static string HashPassword(string password)
{
    byte[] salt;
    byte[] buffer2;
    if (password == null)
    {
        throw new ArgumentNullException("password");
    }
    using (Rfc2898DeriveBytes bytes = new Rfc2898DeriveBytes(password, 0x10, 0x3e8))
    {
        salt = bytes.Salt;
        buffer2 = bytes.GetBytes(0x20);
    }
    byte[] dst = new byte[0x31];
    Buffer.BlockCopy(salt, 0, dst, 1, 0x10);
    Buffer.BlockCopy(buffer2, 0, dst, 0x11, 0x20);
    return Convert.ToBase64String(dst);
}

Hash Check:

public static bool VerifyHashedPassword(string hashedPassword, string password)
{
    byte[] buffer4;
    if (hashedPassword == null)
    {
        return false;
    }
    if (password == null)
    {
        throw new ArgumentNullException("password");
    }
    byte[] src = Convert.FromBase64String(hashedPassword);
    if ((src.Length != 0x31) || (src[0] != 0))
    {
        return false;
    }
    byte[] dst = new byte[0x10];
    Buffer.BlockCopy(src, 1, dst, 0, 0x10);
    byte[] buffer3 = new byte[0x20];
    Buffer.BlockCopy(src, 0x11, buffer3, 0, 0x20);

    using (Rfc2898DeriveBytes bytes = new Rfc2898DeriveBytes(password, dst, 0x3e8))
    {
        buffer4 = bytes.GetBytes(0x20);
    }
    return ByteArraysEqual(buffer3, buffer4);
}

The algorithm still uses a seed (salt) that ensures that the hash generation will not happen twice in the same way. When creating the user, the salt is saved along with the password for the verification process.