What is Encryption and Why Should I Care About It?
Imagine putting a confidential document in a locked safe before mailing it. Only the person with the right key can open the safe and read the document. Anyone who intercepts the package along the way sees only a locked box—the contents remain completely inaccessible to them. That's essentially what encryption does for your digital data.
Most business owners know encryption is "important for security," but the concept feels abstract and technical. You've heard you should encrypt sensitive data, but you're not entirely sure what that means or whether you're actually doing it. Here's the reality: encryption is one of the most powerful security tools available to your business, and you're probably already using it more than you realize—though maybe not everywhere you should be.
What Encryption Actually Is
At its core, encryption transforms readable data into scrambled nonsense that's useless without the right key to unscramble it. Think of it as a secret code, but infinitely more sophisticated than the decoder rings from your childhood.
When you encrypt a file, mathematical algorithms scramble the contents according to a specific key—essentially a very long, complex password. The encrypted file looks like random gibberish to anyone who doesn't have that key. Even if someone steals the encrypted file, copies it, or intercepts it, they can't read the contents without the decryption key. The math behind modern encryption is so complex that breaking it without the key would take thousands of years even with powerful computers.
The beautiful part is that while encryption involves complex mathematics, using it is increasingly simple. Modern systems handle encryption automatically in the background. You don't need to understand the algorithms to benefit from the protection.
Data at Rest: Protecting Stored Information
"Data at rest" is the technical term for information sitting on your devices—files on laptops, documents on servers, databases on your office computers, backups on external drives. When this data isn't encrypted, anyone with physical access to the device can potentially read it.
Consider what happens if someone steals a laptop from your office or a employee's car. Without encryption, the thief can simply remove the hard drive, connect it to another computer, and access every file on it. Your customer list, financial records, employee information, confidential business documents—all immediately accessible.
With full-disk encryption enabled, that same stolen laptop becomes a paperweight to the thief. The entire drive is encrypted, so removing it and connecting it to another computer reveals only scrambled data. Without the encryption key (which requires the user's password), the drive's contents are completely inaccessible.
Modern operating systems make this easy. Windows has BitLocker, macOS has FileVault, and both can encrypt your entire drive with just a few clicks during setup. Once enabled, encryption happens automatically and transparently—you won't notice any difference in day-to-day use, but your data gains massive protection against theft.
Mobile devices are even simpler. Most smartphones encrypt data by default now. When you set a passcode on your iPhone or Android device, you're actually unlocking the encryption. Without that passcode, the device's data remains scrambled and inaccessible. This is why law enforcement sometimes can't access locked smartphones even when they physically possess them—the encryption works.
The practical implications for your business are significant. Laptop stolen from a vehicle? With encryption, no data breach. Phone lost at a conference? Customer information remains secure. Backup drive taken during a break-in? Files are useless without the encryption key. This single security measure prevents countless potential data breaches.
Data in Transit: Protecting Information as It Travels
"Data in transit" refers to information moving across networks—emails sending across the internet, files uploading to cloud storage, credit card numbers transmitted during online purchases, or database queries between your computer and your server.
Without encryption, data traveling across networks is like sending postcards through the mail. Anyone handling the postcard along the way can read it. Network administrators, internet service providers, hackers on the same WiFi network, government agencies—anyone with access to the network path can potentially intercept and read unencrypted data.
With encryption, that same data becomes a sealed envelope, or better yet, a locked box. Even if someone intercepts the data packets as they travel across the internet, they see only scrambled gibberish without the decryption key.
You encounter encrypted data in transit constantly, often without realizing it. That little padlock icon in your web browser's address bar? That indicates HTTPS, meaning your connection to that website is encrypted. Everything you send to the site and receive from it is encrypted during transmission. Login credentials, credit card numbers, personal information—all scrambled in transit so eavesdroppers can't intercept them.
Email encryption is less universal but increasingly important. Regular email is like a postcard—readable by anyone handling it along the way. Encrypted email puts the contents in a locked box that only the intended recipient can open. For businesses handling sensitive information, encrypted email should be standard practice, especially for financial data, health information, or confidential business communications.
VPN connections encrypt all your internet traffic, creating a secure tunnel between your device and the VPN server. This is particularly crucial when using public WiFi at coffee shops, airports, or hotels. Without VPN encryption, other people on that network could potentially intercept your data. With VPN, everything is encrypted and secure even on untrusted networks.
Why This Matters for Your Business
Encryption isn't just a technical nicety—it's often a legal requirement and always a business necessity in today's environment.
Many regulations mandate encryption for specific types of data. HIPAA requires healthcare providers to encrypt patient information. PCI-DSS requires businesses to encrypt credit card data. Various data privacy laws like GDPR include encryption as a recommended or required safeguard. Failing to encrypt sensitive data can result in massive fines if a breach occurs, with regulators viewing lack of encryption as negligence.
Beyond compliance, encryption provides critical protection against modern threats. Ransomware attacks that encrypt your data and demand payment are one of the most common cyber threats businesses face. Having your own encryption doesn't prevent ransomware, but it does mean stolen data remains useless to attackers. Many data breach notification laws include safe harbor provisions—if the stolen data was encrypted, you may not need to notify affected individuals because the encrypted data is worthless to the thieves.
Customer trust increasingly depends on security. Clients want assurance that their information is protected. Being able to say "we encrypt all sensitive data both in storage and during transmission" provides that assurance. A data breach where unencrypted customer information is stolen can destroy a business's reputation overnight.
Insurance considerations are evolving too. Cyber insurance policies increasingly require encryption as a baseline security measure. Without encryption, you may face higher premiums or difficulty obtaining coverage at all.
What You Should Be Encrypting
The question isn't whether to use encryption, but rather ensuring you're encrypting the right things in the right ways.
All laptops and mobile devices should have full-disk encryption enabled. These devices are at highest risk of theft or loss, and they often contain sensitive business information. Encrypting them is simple, free (built into the operating system), and provides tremendous protection.
Backup drives and cloud backups should be encrypted. If your backup strategy includes external hard drives, encrypt them. If you use cloud backup services, ensure they encrypt data both in transit and at rest in their storage. A stolen or lost backup should be as useless to thieves as a stolen encrypted laptop.
Sensitive files should have additional encryption even on encrypted drives. For your most confidential information—financial records, customer databases, employee personal information, intellectual property—consider file-level encryption as an additional layer. If someone does gain access to your system, individually encrypted files provide another barrier.
Email containing sensitive information should be encrypted. While your everyday business correspondence probably doesn't need encryption, emails containing financial data, health information, legal matters, or confidential business information should be encrypted. Many email services offer encryption options, and dedicated encrypted email solutions exist for businesses with high security needs.
Website connections should use HTTPS encryption. If your business has a website, ensure it uses HTTPS (the padlock icon) rather than unencrypted HTTP. This is particularly critical if customers log in, submit forms, or make purchases on your site. Most web hosting providers now include free SSL certificates that enable HTTPS.
What Encryption Doesn't Do
Understanding encryption's limitations is as important as understanding its benefits. Encryption is powerful but not a complete security solution by itself.
Encryption doesn't protect against authorized access. If someone has your password or encryption key, they can decrypt and access your data. This is why password security and access controls remain critical even with encryption. The encryption is only as strong as the key protecting it.
Encryption doesn't prevent malware or ransomware infections. It protects data from theft, but it doesn't stop viruses from infecting your systems or prevent ransomware from encrypting your files with different encryption you can't unlock. You still need antivirus software, security awareness training, and other protective measures.
Encryption doesn't eliminate the need for backups. If your encrypted drive fails mechanically, your data is just as lost as it would be on an unencrypted failed drive. Encryption protects against theft and unauthorized access, but hardware still fails and disasters still happen. Regular backups remain essential.
Encryption doesn't protect data currently in use. When you open an encrypted file to work on it, that file is decrypted in memory. While you're actively using it, malware on your system could potentially access it. Encryption protects data at rest and in transit, but not data actively being processed.
Making Encryption Work for Your Business
The good news is that implementing encryption doesn't require becoming a cryptography expert or investing in expensive specialized software. Most of what you need is already built into your systems.
Start with the easiest wins: enable full-disk encryption on all laptops and ensure mobile devices use passcodes (which activates their encryption). This single step dramatically reduces your risk from device theft or loss and costs nothing but a few minutes of setup time.
Ensure your website uses HTTPS. If you're not sure, look at your website URL—it should start with "https://" not "http://". If it doesn't, contact your web host about enabling SSL. This is usually free and simple.
Review your cloud services and backup solutions. Verify that they encrypt data in transit and at rest. Reputable services advertise this clearly in their security documentation. If your current providers don't encrypt data, consider switching to ones that do.
Implement encrypted email for sensitive communications. Many email providers include encryption options, though they may require both sender and recipient to use compatible systems. For businesses regularly handling sensitive information, dedicated encrypted email solutions may be worth the investment.
Train your team on when and why encryption matters. They should understand that encryption protects data but doesn't replace good password practices, security awareness, or common sense. The best encryption in the world doesn't help if someone emails the decryption key to an attacker.
The Bottom Line
Encryption transforms readable data into useless gibberish for anyone without the proper key. It's one of the most effective security measures available, protecting your business from data breaches resulting from theft, loss, or interception.
The best part? You're probably already using encryption in many places without realizing it. The opportunity is to use it more deliberately and comprehensively, ensuring all your sensitive data receives this critical protection both when stored and when transmitted.
Encryption isn't complicated to implement, doesn't require expensive tools, and provides protection that could literally save your business from the devastating consequences of a data breach. In today's environment where data theft and cyber attacks are constant threats, encryption isn't optional—it's essential.
The question isn't whether you can afford to implement encryption. It's whether you can afford not to.