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Encryption means to scramble data in such a way that only someone with a secret code or key can read it. Encryption is the most effective way to achieve data security. To read an encrypted file, you must have access to a secret key or password that enables you to decrypt it. Unencrypted data is called plain text; encrypted data is referred to as cipher text.
Story on Encryption
A 2009 attack against rockyou.com yielded 32 million passwords; Allowing hackers to replace their dictionary- generated lists with words people were using e.g. passwords. This is why security experts recommend that you should use randomly generated passwords on your sites.
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