How Does Encryption Work?

Posted by: Aubrey Felix on September 18, 2024 at 9:32 am

We know protecting data is essential, especially for your small businesses. As the need to rely on technology grows, so does the need for security measures to prevent unauthorized access to sensitive information. That’s where encryption comes into play. But how does encryption work, and why is it so important?

In this article, we’ll break down the basics of encryption, explore the different types, and explain why every person in a small business—whether you’re an owner or an employee—needs to understand and implement encryption.

What is Encryption, and How Does it Work?

At its core, encryption is a method of converting readable data (plaintext) into an unreadable format (ciphertext). This process ensures that sensitive information, like financial data, customer records, and login credentials, are protected from unauthorized access. Only people with the correct decryption key can convert the ciphertext back into its original, readable form.

Encryption is like locking your business’s doors at night—without the right key, no one’s getting in. But instead of physical keys, encryption uses complex algorithms to secure data. As defined by Norton, “An encryption key is a series of numbers used to encrypt and decrypt data. Encryption keys are created with algorithms, and each key is random and unique.”

Types of Encryption

When considering how encryption does work, it’s important to understand the two main types: Symmetric Encryption and Asymmetric Encryption. Norton provides a concise description below:

1. Symmetric Encryption:

   • Symmetric encryption uses a single secret password or key to encrypt and decrypt data. The key could be a code or a random string of letters or numbers generated by a random number generator (RNG), which is typically required for banking-grade encryption. Symmetric algorithms are the simplest and most used form of encryption.Symmetric encryption algorithms are available in two forms:
     • Block algorithms: Encrypt a group of plain text symbols as one block.
     • Stream algorithms: Convert one symbol of plain text directly into ciphertext.

     Although symmetric encryption has its weak spots, it makes up for them in speed and efficiency. Since only one key is shared between parties—and that key is typically much shorter than with asymmetric encryption—symmetric cryptography is faster to run.

2. Asymmetric Encryption:

   • Asymmetric encryption—also known as public key cryptography—uses two keys for encryption and decryption. A public key, which is shared among users, can either encrypt or decrypt the data. A private key can also encrypt or decrypt data, but it’s not shared among users. The key you choose to encrypt or decrypt depends on the security measure you’re trying to employ:
     • Encrypting with the public key: ensures only the intended recipient can use the corresponding private key to decrypt the message, even if the information was breached during transit
     • Encrypting with the private key: allows the recipient of the information to verify the sender’s identity, since they won’t be able to decrypt data that’s been tampered with by an unauthorized user

     Because asymmetric encryption uses two longer keys, it’s much slower and less efficient to run compared to symmetric cryptography. It can even bog down networks and create issues with memory capacity and battery life.

     However, asymmetric encryption is considered more advanced in terms of security than symmetric cryptography. Both are still in use today—sometimes simultaneously to compensate for the other’s weaknesses.  – Norton

Common Encryption Algorithms

Encryption algorithms are like the locks on your business doors—they vary in strength. Here are some of the most common ones:

• AES (Advanced Encryption Standard): This is the go-to encryption algorithm for securing sensitive data, used by governments and businesses alike. It’s fast, reliable, and offers different levels of encryption (128-bit, 192-bit, and 256-bit).
• RSA (Rivest-Shamir-Adleman): Widely used for secure data transmission, RSA relies on two keys, making it a strong choice for protecting sensitive communications.
• 3DES (Triple Data Encryption Standard): Though not as fast as AES, 3DES is still used in legacy systems where higher security isn’t required. It applies the DES algorithm three times to each data block.
• Blowfish: A fast and flexible alternative, Blowfish is often used for encrypting data in e-commerce applications.

Why Encryption is Crucial for Small Businesses

Encryption isn’t just for big corporations. Small businesses, especially those handling customer data, financial records, and confidential business information, are prime targets for cyberattacks.

• For Owners: Encryption ensures that even if your data is intercepted, hackers won’t be able to read it. This helps protect sensitive business information, reduces liability, and maintains trust with your clients.
• For Employees: Encryption protects employees’ personal information, including payroll and HR data, from potential breaches. It also secures communications and file-sharing, especially if employees work remotely or use personal devices for work.

For small businesses, this means encryption provides peace of mind that their data is secure, even when shared or stored in the cloud. That’s one reason it’s important to learn about IT Consulting services and how you can keep your data secure.

Is Encryption Needed for Compliance?

For businesses in highly regulated industries like healthcare, finance, and retail, encryption isn’t just a recommendation—it’s often a legal requirement. Regulations such as HIPAA (Health Insurance Portability and Accountability Act) mandate encryption of patient records, while GDPR (General Data Protection Regulation) requires encryption for personal data of EU residents. Failure to comply with these regulations can result in hefty fines and damage to a business’s reputation. Understanding how encryption works and implementing it correctly is vital for staying compliant and avoiding potential legal issues.

According to TechTarget: “The security provided by encryption is directly tied to the type of cipher used to encrypt the data, as well as to the strength of the decryption keys used to convert the ciphertext to plaintext. In the United States, cryptographic algorithms approved under NIST’s Federal Information Processing Standards should be used whenever cryptographic services are required.”

How Does Encryption Work in Cloud Computing?

With the widespread adoption of cloud computing, ensuring that data is encrypted both at rest and in transit has become a necessity. Cloud service providers, such as AWS, Microsoft Azure, and Google Cloud, offer built-in encryption solutions, but it’s crucial for businesses to understand the shared responsibility model. This model outlines which aspects of encryption are managed by the cloud provider and which are the responsibility of the business. Whether you’re storing sensitive customer information or collaborating on projects via cloud platforms, knowing how encryption works in cloud environments is essential for securing your data.

FAQs About Encryption

1. Is encryption foolproof? While encryption is a powerful security tool, it’s not foolproof. If encryption keys are lost or stolen, your data could still be vulnerable. That’s why key management is crucial.

2. How does encryption protect data during transmission? Encryption scrambles data before it’s sent over the internet, making it unreadable to anyone who intercepts it. When the data reaches its destination, it’s decrypted back into its original form.

3. Can encryption slow down my systems? Symmetric encryption is fast and typically has minimal impact on system performance. Asymmetric encryption is more secure but can be slower, especially for large amounts of data. However, modern systems are designed to handle these algorithms efficiently. Managed IT Services can optimize performance and security if that’s a worry you have.

4. Do I need encryption for emails? Yes. Email encryption is essential for protecting sensitive information shared between employees, customers, and vendors. Services like Microsoft Outlook and Gmail offer encryption options.

Final Thoughts: How Does Encryption Work for Your Business?

Encryption works to keep you and your business secure. It’s one of the best defenses against data breaches, especially for small businesses that may not have extensive IT resources. By understanding how encryption works and implementing the right strategies, both business owners and employees can keep their data safe from cybercriminals. From protecting customer information to securing internal communications, encryption is a critical tool in your cybersecurity toolkit.

As a trusted IT services provider for small businesses, TAZ Networks can help you implement encryption solutions tailored to your needs. If you want to learn more about securing your business’s data, visit TAZ Networks.

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