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Recently, after opening safari on my macbook air, it began asking for the password to my local items keychain. Immediately this raises a red flag, as this never happened before and seems not entirely unlikely to be some form of malware. Is this actually a security risk or is this something benign?

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Benign, probably. This is related to iCloud Keychain.. it will take the 'local' keychain (called "login") and rename it to Local Items. Then it'll upload the items that it can to iCloud and call that "iCloud".

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