Pretty much anyone who has dealt with ordering goods and services online or doing online banking has heard of encryption. But what exactly is it and how important is it really?

I would say it is absolutely crucial that any personal information being transmitted online be encrypted to the highest level possible. Modern web browsers such as Mozilla FireFox or Internet Explorer have good encryption and do a good job in letting you know if you’re about to send personally identifiable information to a third party. You should always look out for the yellow lock icon whenever you’re about to send a password, address, or other personally identifiable information. Anything less, you should avoid doing so.

Encryption does not end at web browsing and using services on the Internet, however. It’s also important to have strong encryption for your home or office wireless network. The most common type is WEP, which unfortunately, is not as secure as originally thought. With the right tool, it can be hacked in less than a minute. I recommend at least WPA encryption security, or WPA2 if your wireless router and laptop support it.

A growing trend in data privacy and security is the encryption of storage media such as the hard disk drive or even flash drives. I use a Lexar JumpDrive, which can be configured to have an encrypted, password-protected volume. There is a new flash drive called the IronKey. It not only encrypts and protects your data with a hardware Cryptochip, it can also self-destruct. Should it get in the wrong hands, it will literally fry itself so the data cannot be recovered.

For encryption of your files on your computer, there is a non-profit organization called TrueCrypt that has developed a great, free software program. Their program, TrueCrypt, allows you to encrypt entire drives, folders, or individual files with ease.

Here are some quick tips for making sure your data is safe and protected:

• Make sure the yellow lock is on and visible whenever you send information via a form online.
• Make sure the website address is prefixed with an https:// instead of just plain http://. This denotes Secure Socket Layer (SSL) SSL security.
• If you need to transmit sensitive information or documents via e-mail, you really shouldn’t. Instead use fax, certified postal mail, or a secure file-sharing service such as ShareFile.com.
• Contact me if you have any concerns about the privacy of your sensitive data.

For a great article on on encryption, check out How Stuff Works. It is rather technical, but still offers insights on protecting your information online.