DEFINITION of 'Encryption'

Encryption is a means of securing data using a password (key). The encryption process is simple – data is secured by translating information using an algorithm and a binary key. When the data needs to be read back, the code is decrypted using either the same key or a different key depending on the type of encryption used.

BREAKING DOWN 'Encryption'

Encryption strength is based on the length of the security key. In the latter quarter of the 20th century, 40 bit encryption, which is a key with 240 possible permutations, and 56 bit encryption was standard. Those keys were breakable through brute force attacks by the end of the century, and the 128 bit system became standard in web browsers. The Advanced Encryption Standard (AES) is a protocol for data encryption created in 2001 by the U.S. National Institute of Standards and Technology. AES uses a 128 bit block size, but key lengths of 128, 192 and 256 bits. AES uses a symmetric-key algorithm, meaning the same key is used for both encrypting and decrypting the data. 128-bit encryption is standard but most banks; militaries and governments use 256-bit encryption.

RELATED TERMS
  1. Point-To-Point Encryption (P2PE)

    Devices, applications, and processes that keep payment card information ...
  2. Credit Card Authorization Key

    A code used in credit card transaction authorizations that confirms ...
  3. Data Anonymization

    A data privacy technique that seeks to protect private or sensitive ...
  4. Transaction Authentication Number ...

    A one-time code used in the processing of online transactions.
  5. Tor

    Tor is an open source privacy network that permits users to browse ...
  6. Luhn Algorithm

    An algorithm used to validate a credit card number.
Related Articles
  1. Tech

    Explaining the Crypto in Cryptocurrency

    Ever wondered about the cryptography involved in cryptocurrencies?
  2. Tech

    Prevent Employees From Hacking You Computer System

    Cyber security attacks from a current or ex-employee can cause a lot of pain. Here is how to avoid such attacks.
  3. Tech

    Is Making Your Home ‘Smart’ A Dumb Idea?

    Remote-controlled devices and home systems could allow hackers to penetrate your sensitive data, not to mention your premises.
  4. Insights

    What Is the Dark Net?

    The Dark Net (or Darknet) is a subset of secret websites that exist on an encrypted network.
  5. Insights

    6 Ways To Protect Yourself Against Cybercrime

    Cybercrime is becoming more and more serious in the U.S. Here are some ways you can protect your finances from cybercriminals.
  6. Tech

    Cybersecurity Steps Everyone Should Take

    Anyone using a device connected to the internet should employ these cybersecurity practices.
  7. Investing

    UK Wants WhatsApp Accessible to Intel Services

    Facebook is facing calls by lawmakers to make its messaging app accessible to govt. agencies.
  8. Investing

    Apple, FBI Escalate Face-Off In Full Public View (AAPL)

    Monday morning, Apple Inc. CEO Tim Cook fired back again in the company's standoff with U.S. officials.
  9. Investing

    Is Open Source the Future of Wall Street?

    Nontraditional fund Numerai has generated a new digital currency. Could it point to an open source future for the industry?
  10. Tech

    The Highest-Rating, Best-Selling Online Security Apps

    Online security apps are a big deal in this post-Snowden world. Here is a look at five of the highest-rated, best-selling secure messaging apps available.
RELATED FAQS
  1. What is a relative standard error?

    Find out how to distinguish between mean, standard deviation, standard error and relative standard error in statistical survey ... Read Answer >>
  2. What Are the Pros and Cons of Online Checking Accounts?

    Learn about the ways an online checking account can save you time and money, but understand the drawbacks before signing ... Read Answer >>
  3. How do you make working capital adjustments in transfer pricing?

    Understand how working capital adjustments are applicable to transfer pricing. Learn about the arm's length standard and ... Read Answer >>
  4. Is getting a free credit report safe?

    Discover whether getting a free credit report is safe, and find out how to get a legitimate free credit report. Understand ... Read Answer >>
Hot Definitions
  1. Capital Asset Pricing Model - CAPM

    Capital Asset Pricing Model (CAPM) is a model that describes the relationship between risk and expected return and that is ...
  2. Return On Equity - ROE

    The profitability returned in direct relation to shareholders' investments is called the return on equity.
  3. Working Capital

    Working capital, also known as net working capital is a measure of a company's liquidity and operational efficiency.
  4. Bond

    A bond is a fixed income investment in which an investor loans money to an entity (corporate or governmental) that borrows ...
  5. Compound Annual Growth Rate - CAGR

    The Compound Annual Growth Rate (CAGR) is the mean annual growth rate of an investment over a specified period of time longer ...
  6. Net Present Value - NPV

    Net Present Value (NPV) is the difference between the present value of cash inflows and the present value of cash outflows ...
Trading Center