Password Encryption Explained: How It Protects Your Credentials from Attackers

Read full article from BeyondTrust here:  https://www.beyondtrust.com/blog/entry/password-encryption-101-what-it-is-and-why-it-matters-for-credential-security/?utm_source=nhimg

Password encryption is one of those fundamental security processes that happen quietly in the background—most users never notice it, but without it, every password would be stored in plain text. That would mean anyone with access to your systems could read, steal, or sell those credentials instantly.

In other words: no encryption, no real password security.

In this post, we’ll break down how password encryption actually works, how it differs from related concepts like hashing and salting, and how enterprise solutions like BeyondTrust Password Safe bring it all together to keep privileged credentials secure.

How Password Encryption Works

At its core, password encryption scrambles your password into an unreadable format during storage or transmission. The password is encrypted using an algorithm and a unique encryption key—a random string of bits—that transforms plaintext (your readable password) into ciphertext (an unreadable jumble of data).

When you log in, the same key (or a paired key) is used to decrypt that ciphertext back into its original form.

This ensures that even if someone intercepts or accesses the database, they won’t be able to read the actual password without the proper key.

Symmetric vs. Asymmetric Encryption

Encryption can be implemented in two main ways, depending on how the keys are used:

Common Encryption Algorithms

There are several well-known algorithms used to encrypt passwords and sensitive data:

• AES (Advanced Encryption Standard): The current global standard. Supports 128-, 192-, and 256-bit key lengths and is trusted for both speed and strength.
• RSA (Rivest-Shamir-Adleman): A widely used asymmetric algorithm that encrypts with a public key and decrypts with a private key.
• 3DES (Triple DES): The legacy predecessor to AES, using three 56-bit keys.
• Blowfish / Twofish: Public domain algorithms offering flexibility in key length and block size.

Why Password Encryption Matters

Encrypting passwords isn’t just a technical step, it’s a core defense mechanism. Here’s why it’s critical:

• Prevents credential theft: Even if attackers breach your database, they can’t read the passwords without the decryption keys.
• Reduces insider risk: Encryption ensures that even administrators can’t view user passwords in plaintext.
• Meets compliance requirements: Frameworks like HIPAA, PCI DSS, and GDPR mandate encryption for sensitive data.
• Protects against replay and interception: Encrypting passwords in transit prevents them from being stolen mid-transmission.

Encryption vs. Hashing vs. Salting

Although often mentioned together, these are different cryptographic processes that serve distinct purposes:

Used together, encryption, hashing, and salting provide layered defense. Hashing verifies authenticity, salting prevents pattern-based attacks, and encryption protects confidentiality.

Best Practices for Strong Password Security

Even with encryption in place, password strength still matters. Follow these key principles:

• Use complex, long passwords: Combine uppercase, lowercase, numbers, and symbols.
• Avoid reusing passwords: Each system should have a unique one.
• Never store passwords in plaintext: Use a secure vault or password manager.
• Regularly rotate and audit credentials: Especially for privileged or shared accounts.

Layering Encryption with BeyondTrust Password Safe

To protect privileged passwords—those that unlock critical systems—encryption must be paired with active lifecycle management and governance.

BeyondTrust Password Safe takes password encryption further by combining it with advanced controls:

• Automated discovery, onboarding, and vaulting of all credentials, keys, and secrets.
• Session management and analytics to track credential activity and meet compliance goals.
• Just-in-time (JIT) access for users, machines, and AI agents—ensuring credentials are only valid when needed.
• Application password management to eliminate hardcoded secrets in scripts or workflows.
• Workforce Passwords extension for centralized visibility of employee password use.

By combining encryption, hashing, and salting with BeyondTrust’s vaulting, rotation, and governance, organizations can secure every password—human or non-human—under a single, identity-first security model.

Key Takeaway

Encryption is the foundation, but governance is the shield. When your passwords are encrypted, rotated, and properly managed through Password Safe, even compromised data becomes useless to attackers.

Protecting credentials isn’t just about making them unreadable—it’s about making them unusable without authorization.