Data Encryption Guide: How to Protect Your Business Information

Encryption converts readable data into an unreadable format that can only be decoded with the correct key. It is one of the most fundamental and effective tools for protecting sensitive business information.

Whether you need to comply with GDPR, protect customer data, or secure internal communications, encryption is a core requirement. This guide explains how encryption works and how to implement it in your organization.

How Encryption Works

At its core, encryption uses mathematical algorithms to transform plaintext into ciphertext. Only someone with the correct decryption key can reverse the process.

The basic encryption process:

1. Plaintext — The original, readable data
2. Encryption algorithm — The mathematical function that transforms the data
3. Encryption key — The secret value used by the algorithm
4. Ciphertext — The encrypted, unreadable output
5. Decryption — Reversing the process with the correct key

Types of Encryption

Symmetric Encryption

Symmetric encryption uses the same key for both encryption and decryption. It is fast and efficient, making it ideal for encrypting large amounts of data.

Common symmetric algorithms:

• AES-256 (Advanced Encryption Standard) — The current industry standard. Used by governments and enterprises worldwide.
• ChaCha20 — Modern alternative to AES, popular in mobile and network encryption.

Use cases: File encryption, disk encryption, database encryption, VPN tunnels.

Asymmetric Encryption

Asymmetric encryption uses a pair of mathematically related keys: a public key for encryption and a private key for decryption.

Common asymmetric algorithms:

• RSA — Widely used for secure key exchange and digital signatures.
• Elliptic Curve Cryptography (ECC) — Provides equivalent security with smaller key sizes, improving performance.

Use cases: Email encryption, digital signatures, SSL/TLS certificates, key exchange.

Hashing

While not technically encryption (because it is one-way), hashing is essential for data integrity and password storage.

Common hash algorithms:

• SHA-256 — Widely used for integrity verification.
• bcrypt / Argon2 — Designed specifically for password hashing with built-in salting and computational cost.

Use cases: Password storage, file integrity verification, digital signatures.

Encryption at Rest

Encryption at rest protects data stored on disks, databases, and backup media. If a device is stolen or a database is breached, encrypted data remains unreadable without the key.

Full Disk Encryption (FDE)

Encrypts the entire storage device, including the operating system.

Implementation options:

• BitLocker — Built into Windows Pro and Enterprise editions. Uses AES-256.
• FileVault — Built into macOS. Uses XTS-AES-128.
• LUKS — Standard for Linux full disk encryption.

Best practices:

• Enable FDE on all company laptops and desktops
• Store recovery keys securely (not on the encrypted device)
• Use TPM (Trusted Platform Module) for hardware-backed key protection
• Include FDE in your device deployment checklist

Database Encryption

Protects sensitive data stored in databases.

Approaches:

• Transparent Data Encryption (TDE) — Encrypts the entire database at the storage level. Available in SQL Server, Oracle, and PostgreSQL.
• Column-level encryption — Encrypts specific columns containing sensitive data (credit card numbers, personal identifiers).
• Application-level encryption — Data is encrypted by the application before being stored. Provides the strongest protection but adds application complexity.

Backup Encryption

Backup media is frequently overlooked and often contains a complete copy of your most sensitive data.

• Encrypt all backups before they leave the source system
• Use separate encryption keys for backups (not the same as production keys)
• Store encryption keys separately from the encrypted backups
• Test decryption as part of your regular backup restoration testing

Encryption in Transit

Encryption in transit protects data as it moves between systems over networks.

TLS (Transport Layer Security)

TLS encrypts communication between clients and servers. It is the protocol behind HTTPS.

Best practices:

• Use TLS 1.3 (or TLS 1.2 as a minimum)
• Disable older protocols (TLS 1.0, 1.1, SSL)
• Use strong cipher suites with forward secrecy
• Implement HSTS (HTTP Strict Transport Security) on all web services
• Regularly renew and monitor SSL/TLS certificates

Email Encryption

Standard email is transmitted in plaintext. For sensitive communications, implement encryption:

• S/MIME — Certificate-based email encryption. Works with most email clients.
• PGP/GPG — Key-based encryption. More flexible but harder to manage.
• Microsoft 365 Message Encryption — Integrated encryption for Microsoft environments.

VPN Encryption

VPNs encrypt all traffic between the user's device and the corporate network.

• Use WireGuard or OpenVPN protocols (both use strong encryption by default)
• Avoid PPTP and older protocols with known vulnerabilities
• See our business VPN comparison for detailed recommendations

Key Management

Encryption is only as strong as your key management. Poorly managed keys undermine even the strongest encryption.

Key management principles:

• Separate keys from data — Never store encryption keys alongside the data they protect
• Rotate keys regularly — Replace keys on a scheduled basis
• Use hardware security modules (HSM) — Store keys in tamper-resistant hardware for high-security requirements
• Limit access to keys — Apply the principle of least privilege
• Plan for key recovery — Have documented procedures for key recovery without compromising security
• Destroy keys properly — Ensure retired keys cannot be recovered

Encryption and Compliance

Many regulations explicitly require encryption:

• GDPR — Encryption is listed as an appropriate technical measure for protecting personal data
• HIPAA — Encryption is an addressable implementation specification for protecting health information
• PCI DSS — Requires encryption of cardholder data at rest and in transit
• SOC 2 — Encryption supports the security and confidentiality trust service criteria

Frequently Asked Questions

Can encrypted data be hacked?

Properly implemented encryption with current algorithms (AES-256, for example) is not practically breakable with existing technology. Breaches typically occur through stolen keys, implementation flaws, or social engineering — not by breaking the encryption itself.

Does encryption slow down my systems?

Modern hardware includes dedicated encryption acceleration. AES-NI instructions in most CPUs mean encryption adds negligible performance overhead for most workloads.

Should I encrypt everything?

Encrypt all sensitive data at rest and all data in transit. For non-sensitive data, encryption at rest adds protection against device theft. The overhead of modern encryption is low enough to justify encrypting broadly.

Related Guides

Learn about GDPR compliance requirements, explore password security best practices, and strengthen your network security.