Data Encryption: Why is it important?

By 2025, the amount of data generated in the cloud or connected servers each day will reach around 463 exabytes globally. Businesses must be well-versed in keeping all that data stored in different places safe from breaches and other cyberattacks. Used in a plethora of security solutions, data encryption prevents unauthorized users from accessing your precious data. Whether you send data over network wiring or look at it on your disk at home, data encryption ensures that your files stay safe and locked.

What is Data Encryption?

Data encryption translates data into another form, or code so that only people with access to a secret key (formally called a decryption key) or password can read it. Encrypted data is commonly referred to as ciphertext, while unencrypted data is called plaintext. Currently, encryption is one of the most popular and effective data security methods used by organizations.

data encryption

How does encryption work?

When information or data is shared over the internet, it goes through a series of network devices worldwide, which form part of the public internet. As data travels through the public internet, there is a chance it could be compromised or stolen by hackers. To prevent this, users can install specific software or hardware to ensure the secure transfer of data or information. These processes are known as encryption in network security.

Encryption involves converting human-readable plaintext into incomprehensible text, which is known as ciphertext. Essentially, this means taking readable data and changing it so that it appears random. Encryption involves using a cryptographic key, a set of mathematical values both the sender and recipient agree on. The recipient uses the key to decrypt the data, turning it back into readable plaintext.

The more complex the cryptographic key, the more secure the encryption – because third parties are less likely to decrypt it via brute force attacks (i.e. trying random numbers until the correct combination is guessed).

Encryption is also used to protect passwords. Password encryption methods scramble your password, so it’s unreadable by hackers.

Why do we need Data Encryption?

If anyone wonders why organizations need to practice encryption, keep these four reasons in mind:

  • Authentication: Public key encryption proves that a website’s origin server owns the private key and thus was legitimately assigned an SSL certificate. In a world where so many fraudulent websites exist, this is an important feature.
  • Privacy: Encryption guarantees that no one can read messages or access data except the legitimate recipient or data owner. This measure prevents cybercriminals, hackers, internet service providers, spammers, and even government institutions from accessing and reading personal data.
  • Regulatory Compliance: Many industries and government departments have rules in place that require organizations that work with users’ personal information to keep that data encrypted. A sampling of regulatory and compliance standards that enforce encryption include HIPAA, PCI-DSS, and the GDPR.
  • Security: Encryption helps protect information from data breaches, whether the data is at rest or in transit. For example, even if a corporate-owned device is misplaced or stolen, the data stored on it will most likely be secure if the hard drive is properly encrypted. Encryption also helps protect data against malicious activities like man-in-the-middle attacks and lets parties communicate without the fear of data leaks.

Benefits of Data Encryption

  • You can apply data encryption tools and technologies across multiple devices. This enables work-from-home policies and empowers e-commerce.
  • Data encryption enables more secure communications. Data encryption enhances online security by ensuring all transmitted messages are unreadable to unauthorized users since the data has been encrypted.
  • Hacking is a serious risk. Cybercrime and large-scale data breaches are an ongoing risk for any organization, and even the best security can be hacked. This means you should assume that sensitive data can be lost, intercepted, or stolen—and it must be encrypted should that take place.
  • Encryption supports data integrity. Business initiatives sometimes fail due to poor data quality. Businesses can support smarter decisions if they protect their data integrity against hackers and other sources of data corruption.
  • Regulations require it. In the healthcare vertical, the Health Insurance Portability and Accountability Act (HIPAA) requires providers to encrypt sensitive patient data online. In the retail sales vertical, businesses must adhere to the Fair Credit Practices Act (FCPA) and other consumer protection regulations. And institutions of higher learning must protect student records under the Family Education Rights and Privacy Act (FERPA).
  • Data encryption protects intellectual property. Digital rights management systems encrypt data at rest — in this case, intellectual property such as songs or software—to prevent reverse engineering and unauthorized use or reproduction of copyrighted material.
  • It can enhance trust and provide a competitive edge. Data encryption offers reliable security both for people who handle sensitive data and those who trust their data to others. A holistic data encryption strategy consistently applied is essential to staying in line with competitors. Many businesses also signal to their customers that they take privacy seriously by encrypting data even when regulations don’t require them to.

data encryption

Types of Data Encryption

When it comes to the types of data encryption, you can find encryption that is in-transit based, as well as data encryption at rest.

  • Encryption at rest: Encryption at rest refers to a type of encryption for data when it is being stored or “at rest” in a device or system, such as a hard disk, database, or cloud storage. This encryption technique guarantees that the data is secure from theft and unauthorized access, even if the system or device is physically compromised or lost.
  • Encryption in transit: Data encryption in transit is the process of encrypting data while it is being transported over a network between two devices or systems. The data is safeguarded against theft and unauthorized access using this encryption technique while it is being transported.

For the best results, you want to make sure you have both at-rest and in-transit data encryption. If you only have encryption on your disk, but not the network, things can start to go awry. A hacker would be able to hang out in the network traffic to help them gain access to your disk. In turn, your data would certainly be in hot water. This is why having the whole range covered will give you peace of mind, as it pertains to data encryption.

Some challenges

Despite its efficacy as a security tool, encryption does have vulnerabilities, including:

  • Computer programs can break some encryption algorithms and gain access to encrypted content.
  • Encrypted data in transit can be viewed if devices are infected by malware that eavesdrops or sniffs data as it moves across networks.
  • Encrypted data at rest can potentially be compromised by malware or by a cybercriminal who has gained access to systems.

Additional data encryption challenges include issues with key management systems, such as:

  • The overhead required to support these systems.
  • Performance issues.
  • Difficulty integrating with cloud-based systems.
  • Issues with accessing encrypted data.

It is worth noting that data encryption can also be weaponized. Ransomware uses it to lock down files until a ransom is paid.


Data encryption is a given in today’s world of cybersecurity. Hardly any responsible security programs are without them. To ensure your data is safe, educate your organization on best practices for data use and sharing.


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