Data encryption was first used by the government, mainly to guard military secrets. In today's world of Internet businesses, this method of protecting your computer data is being used more and more by financial institutions and other businesses as a means to prevent anyone from gaining unauthorized access to money transfers and other financial matters.

There are several different types of encryption methods that are available. Hardware based encryption is considered to be the best by many computer experts. This type of encryption is placed directly on your computers hardware, which allows you to protect your data even if your operating system is not active.

One of the major advantages that a hardware based encryption system has over the other types is the fact that it can be made virtually transparent to software. This factor simply means that this encryption is transparent to the operating system, allowing it to be used with any system that you may have.

Due to this transparency, hardware based encryption may also enhance your operating system's performance. When integrated with the media itself, this hardware may lead to the media being designed for better integration with other operating systems.

Critics of the hardware based encryption software point out that due to its size of its keys (some being as small as 40 bits), this encryption can easily be subjected to brute force attack. This attack is the way that outside sources can systematically try all the possibilities and combinations of the keys to decrypt all of your data. By only implementing 40 bits, the number of possibilities is at a minimum and a person with strong computer knowledge may easily be able to get around this hardware based security.

Another criticism that has been made about these hardware based encryption systems is the fact that the vendors who manufacture this hardware do not publish how the encryption itself is done. This secrecy leads to the potential customer possibly buying hardware that they know literally nothing about, including how well the encryption system performs. This aspect of the manufacturing of these hardware systems can also lead to vendor lock-in, which means that the customer is locked-in to purchasing all products and services from the vendor who designed that hardware. This policy prohibits the customer from comparative shopping for these products and forces him to pay whatever price the vendor is asking.

Vendor lock-in can also affect the compatibility of the hardware based encryption with other equivalent components. For example, your hardware based best polymorphic crypter system may be inoperable with other systems such as the application program or the file format unless these programs are also designed by the same vendor. These hardware systems may not work with other operating systems either. These prohibitions enable one particular vendor to corner the market for the technological needs of your company.

Another problem that a company may have with hardware based free crypting software is the high cost that is associated with installing and maintaining it. Many companies find that this hardware is just too expensive to be implemented into their computers.