Encryption is the process of converting data to an unrecognizable or "encrypted" form. It is commonly used to protect sensitive information so that only authorized parties can view it. This includes files and storage devices, as well as data transferred over wireless networks and the Internet.
You can encrypt a file, folder, or an entire volume using a file encryption utility such as GnuPG or AxCrypt. Some file compression programs like Stuffit Deluxe and 7-Zip can also encrypt files. Even common programs like Adobe Acrobat and Intuit TurboTax allow you to save password-protected files, which are saved in an encrypted format.
Encryption is also used to secure data sent over wireless networks and the Internet. For example, many Wi-Fi networks are secured using WEP or the much stronger WPA encryption. You must enter a password (and sometimes a username) to connect to a secure Wi-Fi network, but once you are connected, all the data sent between your device and the wireless router will be encrypted.
Many websites and other online services encrypt data transmissions using SSL. Any website that begins with "https://," for example, uses the HTTPS protocol, which encrypts all data sent between the web server and your browser. SFTP, which is a secure version of FTP, encrypts all data transfers.
There are many different types of encryption algorithms, but some of the most common ones include AES (Advanced Encryption Standard), DES (Data Encryption Standard), Blowfish, RSA, and DSA (Digital Signature Algorithm). While most encryption methods are sufficient for securing your personal data, if security is extremely important, it is best to use a modern algorithm like AES with 256-bit encryption.