To bring advances like Stacks and enhanced Search to your email, Alto does store limited account data on secure, inaccessible servers.
Metadata about mail messages, along with a short-term (up to 60-day) cache of content like photos, may be stored. This helps make things quick & responsive, and allows Alto to automatically identify information in a message to display it usefully.
No cached data is shared with anyone.
Alto's IMAP connection uses Secure Sockets Layer encryption (SSL) and performs authentication over a secure channel. Passwords are heavily encrypted. For Gmail accounts, Alto simply uses OAuth 2.0 to get an access token from Gmail, so your Gmail password will never be sent through Alto.
What's stored by Alto does not comprise a complete version of your email account.
Your full account is only stored on your account provider's servers, to which Alto syncs whenever something changes: if a message is composed, opened, replied to, forwarded, etc.
(For example, if you're using Gmail in Alto and you delete a message, the message is deleted from your Gmail account.)
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The Alto team
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