Table of Contents
Key Takeaways:
- Data encryption is the process of converting readable data into an unreadable format using an algorithm and a key. This helps sensitive information remain secure and inaccessible to unauthorized parties.
- Only individuals or systems with the correct decryption key can reverse the encryption process and convert the ciphertext back into its original readable form.
- There are two primary types of encryption: symmetric encryption, which uses a single key for both encryption and decryption, and asymmetric encryption, which uses a public key for encryption and a private key for decryption.
Decades ago, sensitive information was shared primarily through printed materials—letters, files, and physical documents. While this method still exists in some industries, the shift to electronic communication and digital storage has introduced new risks. Digital methods offer convenience, speed, and scalability, but they also open the door to cyber threats. Hackers can intercept data during transmission, exploit system vulnerabilities, and gain unauthorized access to confidential information.
These breaches are not just technical issues. They have real-world consequences—ranging from financial losses and reputational damage to business collapses and, in extreme cases, national security threats. One IBM study found that the average cost of a data breach in 2023 was $4.45 million. However, businesses that implemented robust encryption saved an average of $1.4 million per breach, according to the Ponemon Institute.
What Is Data Encryption?
Data encryption is the process of converting readable information (plaintext) into a scrambled, unreadable format (ciphertext) to protect it from unauthorized access. This is done using mathematical algorithms that secure the data during storage or transmission. Only individuals with the correct decryption key can convert the ciphertext back into its original form.
Encryption is essential for maintaining the confidentiality of digital information, especially as data moves across networks or is stored in cloud systems. It helps prevent eavesdropping, tampering, and data breaches, forming a critical layer of defense in modern cybersecurity frameworks.
What Is the Difference Between Encryption and Decryption?
Encryption and decryption are two sides of the same process that protects information.
Encryption transforms readable data into an unreadable format to prevent unauthorized access. Decryption does the opposite—it restores the original data using a specific key, making it understandable again to the intended recipient.
These processes work together to ensure that information stays secure while it is stored or transmitted. For example, when you use a messaging app like WhatsApp, your message is encrypted before it leaves your phone. Even if someone intercepts it during transmission, they can’t read it. Only the recipient’s device has the correct decryption key to unlock and display the original message. Without that key, the message remains scrambled and inaccessible.
What Are the Two Types of Encryption?
In data encryption, a “key” is a string of information used to encrypt and decrypt data. It plays a central role in protecting sensitive information and controlling access. There are two main types of encryption: symmetric and asymmetric. Each method serves specific use cases and comes with distinct advantages.
1. Symmetric Encryption
Symmetric encryption uses the same key for both encryption and decryption. This means the sender and the recipient must both have access to the same key, which must be kept secure. While this method is efficient and fast—especially for encrypting large volumes of data—it presents challenges around key distribution. If the key is intercepted during sharing, the data becomes vulnerable.
This method is commonly used for encrypting files, databases, or internal systems where both parties already have a secure way to share keys.
2. Asymmetric Encryption
Asymmetric encryption, also known as public key encryption, uses a pair of keys: a public key to encrypt the data and a private key to decrypt it. The public key can be openly shared, but the private key is kept secret by the recipient. This setup allows secure data exchange without the need to share sensitive decryption keys.
It is widely used in digital communications—such as secure emails, HTTPS websites, and digital signatures—where the sender may not have a secure channel to share a private key in advance.
Real-World Uses of Data Encryption
Encryption helps keep your personal information safe, even if you don’t see it happening. From browsing websites to sending messages or making payments, it works quietly in the background to protect your data. Here are some of the most common ways it’s used:
1. Safe Browsing on the Web
Encryption protects the data shared between your browser and a website. Sites that use “HTTPS” rely on encryption protocols like SSL (Secure Sockets Layer) and TLS (Transport Layer Security) to keep your information private as it travels over the internet. This helps prevent attackers from intercepting things like passwords, credit card numbers, and personal details.
For example, when you log into your bank account or shop online, encryption ensures your information stays secure. The padlock icon in your browser’s address bar is a sign that the connection is encrypted.
2. Private Messaging and Email
Many messaging and email platforms use end-to-end encryption so only you and the person you’re communicating with can read the messages. This is especially important for people working in healthcare, law, or journalism who often handle sensitive information.
Apps like WhatsApp and Signal automatically encrypt messages, so not even the company can see what’s being said. Services like ProtonMail offer encrypted email for people who want added privacy.\
3. Secure Online Payments
Encryption plays a big role in keeping online payments safe. It protects your data—like credit card numbers and login info—when you check out on a website or use mobile banking.
Services such as Apple Pay and Google Pay encrypt payment details from the moment you make a transaction. Banks like Chase and Bank of America also use encryption in their mobile apps to keep your data secure from hackers.
4. Government and Military Protection
Government agencies and military organizations use encryption to protect classified information and national security data. It helps keep sensitive files, emails, and databases safe from cyberattacks and espionage.
For instance, the U.S. Department of Defense uses AES-256 encryption to secure its networks. Some intelligence agencies are even preparing for the future by testing quantum-resistant encryption technologies.
Key Benefits of Using Encryption for Data Security
Once you understand what encryption does, it’s easier to see why it’s so essential for keeping data secure. Below are some of the main ways encryption helps protect sensitive information across systems and industries.
1. Protects Confidential Information
Encryption makes sure that only people with the right decryption key can access data. This keeps sensitive information—like personal details, financial records, or medical files—private and safe from unauthorized access.
2. Strengthens Database Security
Whether data is stored on a company server or in the cloud, encryption helps prevent it from being read or stolen during a breach. Even if someone gains access to the database, the data remains unreadable without the proper key.
3. Maintains Data Integrity
Encryption supports data integrity by confirming that information hasn’t been tampered with. Techniques like hash functions create unique digital fingerprints for each file. If the data changes in any way, the fingerprint also changes—signaling that something might be wrong.
4. Verifies Identity and Prevents Forgery
Encryption tools like digital signatures help verify who sent a file or message. They confirm that the content is genuine and hasn’t been altered in transit. This builds trust between parties and protects against forgery or impersonation.
5. Secures Communication Channels
End-to-end encryption is used in apps, websites, and emails to protect messages while they’re in transit. It creates a secure path between sender and receiver so that no one else can read or alter the content along the way.
6. Supports Compliance with Privacy Laws
Regulations like GDPR, HIPAA, and SOC 2 require businesses to protect user data. Encryption helps meet these requirements by adding a strong layer of security, reducing the risk of data breaches and ensuring compliance with privacy standards.
Conclusion
Identity.com
As a blockchain company operating in the internet era, we value security, privacy, and data protection. As a company working on identity solutions, we base all our developments on these crucial subjects. Although our primary ecosystem is the blockchain industry, our solutions aren’t limited to it. Identity.com is also a member of the World Wide Web Consortium (W3C), the standards body for the World Wide Web.
Identity.com, as a future-oriented company, is an open-source ecosystem providing access to on-chain and secure identity verification for businesses, giving their customers a hassle-free experience. Our solutions improve the user experience and reduce onboarding friction through reusable and interoperable Gateway Passes. For more information on how we can help you with identity verification and general KYC processes, please refer to our docs.
