What Is Encryption? How It Works, Types, and Benefits

What Is Encryption?

Encryption secures digital data using one or more mathematical techniques known as cryptography. The information input becomes unreadable through encryption as an algorithm converts the original text, known as plaintext, into an alternative form known as ciphertext.

When an authorized user needs to read the data, they may decrypt the data using a binary key or password. This will convert ciphertext back to plaintext so that the user can access the original information.

Encryption is an important way for individuals and companies to protect sensitive information from hacking. For example, websites that transmit credit card and bank account numbers encrypt this information to prevent identity theft and fraud.

Key Takeaways

  • Encryption secures digital data by encoding it mathematically through cryptography so that it can only be read, or decrypted, by those with the correct key or password.
  • Digital encryption uses an algorithm that makes the original information unreadable.
  • Encryption is crucial in a digitally-connected world to keep private information, messages, and financial transactions private and secure.

How Encryption Works

Encryption strength depends on the length of the encryption security key. In the late 20th century, web developers used either 40-bit encryption, which is a key with 240 possible permutations, or 56-bit encryption.

By the end of the century, hackers successfully broke those keys, leading to a 128-bit system as the Advanced Encryption Standard (AES) encryption length for web browsers. Created in 2001 by the U.S. National Institute of Standards and Technology, key lengths of 128, 192, and 256 bits are available. Most banks, militaries, and governments use 256-bit encryption.

Encryption underlies the security and functionality of decentralized cryptocurrencies, such as Bitcoin.

Types of Encryption

Asymmetric Encryption

Asymmetric cryptography is used when increased security is the priority over speed and when identity verification is required. This type of encryption is used for digital signatures when signing an online document and in blockchain to authorize transactions for cryptocurrency. 

Asymmetric-key algorithms use different keys for the encryption and decryption processes. Types of asymmetric encryption include RSA and PKI.

RSA is a popular algorithm used to encrypt data with a public key and decrypt it with a private key for secure data transmission. Public key infrastructure (PKI) governs encryption keys through the issuance and management of digital certificates.

Symmetric Encryption

Symmetric encryption is used when speed is the priority over increased security and uses one secret symmetric key to both encrypt the plaintext and decrypt the ciphertext. This encryption is commonly used in credit card transactions.

Types of symmetric encryption included Data Encryption Standards (DES), a low-level encryption block cipher algorithm that converts plain text into blocks of 64 bits and converts them to ciphertext using keys of 48 bits, and Advanced Encryption Standard (AES), the gold standard for data encryption and is used worldwide as the U.S. government standard.

Benefits of Encryption

Encryption protects the confidentiality of digital data stored on computer systems or transmitted over the internet. As organizations rely on hybrid and multi-cloud environments, public cloud security and protecting data across complex environments is a concern.

Cloud service providers are responsible for the security of the cloud, but customers are responsible for security within the cloud, especially the security of any data. An organization’s sensitive data must be protected while allowing authorized users to perform their job functions. This protection should not only encrypt data but also provide robust encryption key management, access control, and audit logging capabilities.

Businesses and consumers benefit from encryption and benefit from security at the file, database, and application levels for on-premise and cloud data. The Payment Card Industry Data Security Standard (PCI DSS) requires merchants to encrypt customers' payment card data when it is both stored and transmitted across public networks.

What Is the Difference Between a Public Key and a Private Key in Encryption?

In asymmetric encryption cryptography, one public and one private key are used to encrypt and decrypt data. The public key can be disseminated openly, while the private key is known only to the owner. In this method, a person can encrypt a message using the receiver’s public key, but it can be decrypted only by the receiver's private key.

What Is Hashing In Cryptography?

Hashing functions are an essential part of cybersecurity and some cryptocurrency protocols such as Bitcoin. Hashing converts any form of data into a unique string of text. It is a mathematical operation that is easy to perform, but difficult to reverse. The average user encounters hashing daily in the context of passwords. When an email address and password are created, the email provider does not save the password, but runs the password through a hashing algorithm and saves the hash of the password. Every time there is a sign-in to email, the email provider hashes the password entered and compares this hash to the hash it has saved. When the two hashes match, email access is granted.

What is Cryptographic Failure?

A cryptographic failure is a security vulnerability that exposes sensitive data on a weak or non-existent cryptographic algorithm such as passwords, patient health records, business secrets, credit card information, email addresses, or other personal user information.

In 2013, hackers attacked Target Corporation and managed to compromise the information of up to 40 million credit cards. Although the credit card information was encrypted, the hackers’ sophistication still broke through the encryption and is regarded as one of the largest breaches of its kind in U.S. history, leading to an investigation by the U.S. Secret Service and the Justice Department.

The Bottom Line

Encryption is essential to keep private information, messages, and financial transactions private and secure in a digital world. It protects the confidentiality of digital data stored on computer systems or transmitted over the internet. Various types of encryption techniques are available including the Advanced Encryption Standard (AES), the gold standard for data encryption, used worldwide and the U.S. government standard.

Article Sources
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  2. IBM. "What Is Encryption? Data Encryption Defined."

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  5. Congressional Research Service. "The Target and Other Financial Data Breaches: Frequently Asked Questions."