File Encryption: How It Works and Why It Matters

Protect sensitive data using secure encryption methods and protocols 

What is File Encryption?

Encryption is a method of encoding information so that it’s unusable until decrypted. With encryption in place, only authorized parties receive the keys to read or access that data. Encrypting files helps to prevent unauthorized access or tampering while data is in transit or at rest, depending on the method used.

Original methods of encryption simply shifted letters through the alphabet or substituted letters and symbols, such as the Caesar Cipher or the Enigma machine. Today's file encryption is more sophisticated, more secure, and more difficult to crack--It is critical for protecting sensitive business data, intellectual property, and regulated information. This allows encrypted document sharing and transfer to be a viable and secure option for organizations and individuals alike.

 

Essential File Encryption Terms

Algorithm

Also known as ciphers, algorithms are the rules or instructions for the encryption process. Triple DES, RSA, and AES are examples of encryption algorithms, or ciphers.

Decryption

The process of converting the unreadable cipher text that has been encrypted back to the original, readable information.

Key

A unique, randomized string of bits used to encrypt and/or decrypt data. Common key lengths are 128 and 256 bits for private keys and 2048 bits for public keys.

 

More file encryption terms >

How Encryption has Evolved

Securing communications has been essential since writing was invented, even ancient Egyptians used symbol replacement to keep texts private. As technology progressed, encryption moved from simple codes, to specialized tools that would encrypt messages, to encryption software. And as computers became more powerful, encryption had to use increasingly long keys to avoid brute-force attacks.

Today, due to rising cyber threats, several regulatory mandates require encryption. The Health Insurance Portability and Accountability Act (HIPAA), Payment Card Industry Data Security Standard (PCI DSS), and General Data Protection Regulation (GDPR) require robust encryption for data at rest and in transit.  
End-to-end encryption is also required to ensure if data is stolen it remains unreadable.

How Does File Transfer Encryption Work?

Files are encrypted using complex algorithms that scramble readable data (plaintext) into unreadable code (ciphertext) and then are decrypted using a key provided by the originator of the message. This process forms the basis of file transfer encryption, ensuring that sensitive data stays protected while moving between systems and users via secure protocols like SFTP, FTPS, or HTTPS. Encryption can occur before or during transmission depending on the method used. For enterprises, this ensures secure data exchange across internal systems and external partners.

The effectiveness of encryption technology is determined by:

  1. The strength and complexity of the algorithm
  2. The length of the key
  3. The appropriateness of the chosen encryption system

Information that has been encrypted remains confidential because it is rendered unreadable to anyone without the decryption key. Some encryption algorithms offer further file protection by ensuring that files are not altered or tampered with during transit.


 

Keep reading: How Encryption Works: Everything You Need to Know 

How Are Files Encrypted?

There are a variety of encryption standards for encrypted document sharing. Some are used most frequently by specific industries, and others are most compatible with specific databases. Popular encryption protocols and standards include:

AES, RSA

AS2, AS3, or AS4

Open PGP

ZIP with AES

SFTP (SSH File Transfer Protocol)

FTPS (File Transfer Protocol over SSL)

PeSIT

HTTPS

Most encryption technologies filter data through a series of changes – substitutions, permutations, and other operations – multiple times to conceal the message.

What are Symmetric vs. Asymmetric Keys?

Symmetric

Keys that can be used by both the sender and receiver to encrypt and decrypt messages are symmetric, since the key is the same on both sides. 

Asymmetric

Asymmetric encryption uses two keys, usually one public and one private. Knowing the public key allows you to encrypt the file, while the recipient uses their private key to decrypt the message.

Symmetric encryption is faster as a single shared key is used for encryption and decryption. It is ideal for bulk data. Asymmetric encryption offers superior security but at slower speeds. Modern encryption software, such as Open PGP, combine both using asymmetric for key sharing and symmetric for data transfer. 

What Does File Transfer Encryption Do?

Each encryption standard protects the privacy and integrity of your organization’s data slightly differently. For instance:

Open PGP

Open PGP encryption is used for encrypting, decrypting, and authenticating files. It uses hashing, data compression, symmetric private-key cryptography, and asymmetric public-key cryptography to keep data secure. PGP encryption, done via software applications, transforms plain, readable text into a complex code of characters that are unreadable. Open PGP is a secure file encryption and decryption option.
GPG (GnuPG)

GPG (GnuPG), a different implementation of the Open PGP standard, opens and decrypts files encrypted by PGP or Open PGP. GPG is a useful tool for encrypted file share.
SFTP

SFTP uses encryption algorithms to securely move data to your server, keeping files unreadable during the process. SFTP also requires authentication to prevent unauthorized file access during the operation. SFTP offers file sharing encryption, encrypted data transfer, and encrypted file distribution.

All-in-all, file transfer encryption and file encryption systems encode your data either in motion or at rest, or both, and requires a key to decrypt the data. This keeps the content of your files secure and ensures confidentiality, integrity, and authenticity. File transfer encryption also supports secure B2B data exchange and compliance requirements. 

All-in-all, file transfer encryption encodes your data either in motion or at rest, or both, and requires a key to decrypt the data. This keeps the content of your files secure.

Which Files Can Be Encrypted?

Nearly all file types can be encrypted, including text files, emails, data files, directories, and disk partitions. Encryption software can also be deployed on a variety of platforms, both cloud-based and on-premises, including:

Windows

VMware

Linux

Azure

IBM i

AIX and UNIX

How to Choose File Encryption Software

When choosing which encryption standard to implement, consider the following:

  • How sensitive is the data being exchanged?
  • How will the data be transported (for example, FTP, email, HTTP)?
  • Are large files being exchanged (which should be compressed)?
  • Should the process of encrypted file sharing and transfer mean the files be encrypted (before transmission) or should the connection be encrypted?
  • What encryption standards does your trading partner support?
  • Does the solution support automation and workflow integration?
  • Does it provide centralized key management and auditing?
  • Does it support compliance requirements and reporting?
  • Can it scale across distributed systems and users? 

The best encryption software for you hinges on you and your trading partners’ requirements. Some trading partners may dictate the encryption standards due to their industry or other requirement. There are a variety of scenarios that influence what type of protection is best for your organization: simple password protection, exchanging data, authentication, sending sensitive information, getting a receipt of delivery, and more.

No matter what you need when it comes to encryption, securing your file sharing is easier with GoAnywhere.

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How Your Peers Are Using File Encryption Software

SES Encrypts and Audits Global Client Data

Industry: Business Services

Summary: Organizations worldwide depend on software escrow agreements to encrypt and automate the delivery of intellectual property. Learn how SES achieves this with GoAnywhere MFT.

Read More

File Encryption FAQs

File encryption converts data into an unreadable format to protect it from unauthorized access. Only users with the correct key can decrypt the content. 

The best way is to use strong encryption standards such as AES, TLS/SSL, and SSH combined with centralized key management, automated policies, and secure transport controls. 

The most effective solutions offer automated encryption, secure file transfer encryption, auditing, and policy-based control — all capabilities included in GoAnywhere platform. 

Common methods include symmetric encryption, asymmetric encryption, hashing, and end-to-end encryption. 

Encrypted file transfer protects data while it moves between systems or partners using strong encryption protocols and secure channels.

No. Neither FTP nor TFTP provide encryption. Secure alternatives like SFTP, FTPS, and HTTPS should be used instead. 

Both use SSH, but SFTP offers stronger controls, session management, and more robust security features.

The most secure transfer method combines file encryption, encrypted transport protocols, access controls, and audit logging — typically through a managed file transfer or automation solution. 

Files are encrypted using a key or algorithm and are decrypted using the corresponding key. GoAnywhere automates process this across workflows.

Yes. Encrypted files can be decrypted with the correct key or credential. Without them, the file remains unreadable. 

Encryption at rest protects data stored on devices or servers, while encryption in transit secures data as it moves between systems. Both are essential for comprehensive data protection strategies. 

No. While encryption protects data, organizations also need access controls, authentication, monitoring, and audit logging to fully secure file transfers, especially in enterprise environments. 

Encryption helps protect sensitive data and is a key requirement in many regulations such as HIPAA, PCI DSS, and GDPR. It ensures that data remains confidential and reduces the risk of breaches. 

Encrypted files can be intercepted, but without the correct decryption key, the data remains unreadable. This is why strong encryption and secure key management are critical.

Encryption Resources from GoAnywhere

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