Data Encryption is the process of encoding the data using an encryption algorithm. It converts sensitive information or data into a form that is unreadable or incomprehensible. This encrypted data is often referred to as ciphertext, which is encrypted text transformed from plain text.
Encrypted data or ciphertext is readable only when any authorised person/entity decrypts it, that is, converts it into plaintext. The decoding of ciphertext is possible through an encryption key or better to say decryption key. Certain authorised people hold this key that can decrypt the data back into plaintext.
The encryption algorithm is known as cryptography which employs mathematical techniques to secure data.
Now data encryption does not prevent data theft but protects it from being read. So, even if hackers and fraudsters can breach or steal the data, they may not be able to read/understand the encrypted information.
For example, card issuers encrypt the confidential data of cardholders via magnetic strips, PINs, CVV, electronic chips, etc. for online transactions.
Encryption is of two types, that is, two types of algorithms that determine how to encrypt and decrypt the data. They are-
- Symmetric Key Encryption
Symmetric key encryption uses a private or a secret key, both to encrypt/encode the data and also to decrypt/decode. Henceforth, it is also known as secret key encryption. This means a private key encrypts confidential information and the recipient of the information must also receive that key to decrypt the data.
Suppose a customer wants to make a payment to a merchant. The payment system (like a payment gateway or a payment service provider) generates a shared secret key, known as the symmetric key. The customer’s device encrypts the payment details using that symmetric key. It then sends the encrypted payment information to the merchants and the payment system.
It also securely shares this symmetric key with them and it remains confidential. When the payment gateway or/and the merchant receive the encrypted payment information, they decrypt the payment details using the shared symmetric key. They verify the payment details to ensure that all information is valid.
Symmetric key encryption is usually easier and faster than asymmetric key encryption (explained next). Therefore, it is apt for payments and other information sharing where speed and efficiency are critical. However, it requires the secure distribution and management of the shared key between the entities involved in the payment process.
Common symmetric encryption algorithms include Advanced Encryption Standard (AES) and Data Encryption Standard (DES).
- Asymmetric Key Encryption:
Asymmetric key encryption uses a pair of mathematically interconnected keys – a public and a private key. The public key is for encryption and can be shared with others. The private key is for decryption which the authorised entities keep as a secret to decode/decrypt the encrypted data upon receiving it.
For example, let’s consider customers making payments on an e-commerce website/app through a payment gateway. The payment gateway generates a key pair for secure transactions that includes public & private keys.
Customers send their data like card or bank account details, payment amount, etc. to the payment gateway. Customers’ devices send this data by encrypting it through the PG’s public key.
The public key verifies digital information and scrambles the data in such a way that only its private key can decrypt it. Now the payment gateway receives customers’ information and they have the private key to decrypt it.
By employing asymmetric key encryption, the payment gateway ensures the customers that the payment process is secure. Hence, they can transmit payment data without exposing it to potential attackers. It builds customers’ trust that the transactions are safe and authentic. It assures them that public and private keys protect their sensitive payment information. ECC (Elliptic Curve Cryptography) and RSA (Ron Shamir Adleman -initials of those who patented this algorithm) are some common examples of asymmetric encryption.
Benefits of Encryption
Here are a few key advantages that encryption offers-
- Encryption can protect the confidentiality of personal and sensitive information of individuals. Only a few authorised entities will have access to read the data by decrypting it
- It safeguards against hackers and cyber attackers. It can thwart such cyber criminals, who may access the data through malpractices but can’t misuse the unreadable data
- It adds to the authentication and integrity of the information by ensuring that during data exchange, no one altered it in any way. It protects data from any kind of tampering by storing them in their original state
Various applications such as online financial Transactions, data storage (cloud services, databases, etc.) or secure communication (Whatsapp, emails, etc.) widely apply and use the data encryption process.
