Two years ago, on a business trip to Lisbon, some thieves nicked my bag from the boot of a rental car. Gone were all my clothes, my iPod, train and plane tickets, passport and other random replaceable things, like my dignity. It was a simple smash and grab job: I had nipped off to a bar to watch some football. Once I was out of view, the thieves pounced on the back window of the car, gaining access to the boot, and the loot was theirs. I came out a few minutes later to find broken glass and no trace of my stuff. Luckily, I had taken two of my most valuable possessions into the bar with me. One was my mobile phone; the other, my Palm Pilot containing hundreds of my sources’ addresses, phone numbers and e-mails, plus my bank account details, down to pin and passwords.

I was lucky – as were my contacts. Some 26.5 million American military veterans, we learned this week, were not so lucky.

The names, birth dates and social security numbers of every American military veteran discharged since 1975 were lost after somebody broke into a house in Virginia and ran off with a laptop and external hard drive containing the details. For a fraudster, this would be a valuable score, indeed. In the messy mea culpa issued by the Department of Veterans Affairs, they admitted that the employee who had the data swiped from him was not even authorised to leave the office with the file. Oops.

This incident, the latest in a string of ID theft cases, brings into stark focus the vulnerability of your personal records. You may have thought of every precaution in the book, from password protections to padlocks. But how securely do the institutions and companies we deal with every day – from banks to the NHS – store our personal details?

If the laptop I am typing away at right now were to vanish in a theft, a decent-sized cache of personal information on me and many of my contacts would be in jeopardy. But I think I found a solution: encryption.

Don’t groan. I realise that the idea of turning your files into indecipherable hieroglyphics seems a bit excessive, but you don’t have to be an MI6 agent or terrorist financier to find a practical use for this technology.

I found a dead simple open-source program on the web called True Crypt that will have you encrypting birthday invitations and keychain-sized USB pen drives in no time. I got a bit carried away with True Crypt. After installing the software, I spent an hour converting scores of Word files – even the notes for this article – onto an encrypted disk I created, hidden deep inside my hard drive. That’s how it works. It creates secret areas within your hard drive, hidden from prying eyes.

According to the True Crypt website, "No True Crypt volume [file] can be identified." I’m not so sure that it’s government-proof, but it seems incredibly effective to me because it leaves no trace of the file anywhere on the hard drive. I dumped my files onto an "M" drive, a drive that never appears on my computer directory. In the same way, you can create hidden folders on any device with memory, as long as you are working on a Windows or Linux-based PC.

I was tipped off about True Crypt by Urs Gattiker, founder and chief technology officer of CyTRAP Labs. He used True Crypt to encrypt a hard drive and memory stick. There are other effective open-source encryption projects ongoing, including The FreeNet Project. But, he says, it’s unlikely that the availability of these programs will lead to an upsurge in general computer users encrypting their files.

"These two tools should be great for people who live in more totalitarian states. In those cases, downloading certain news and storing it on a computer can get a person into serious trouble. Here, True Crypt and FreeNet can make things a bit safer for people, but they will not make things 100 per cent safe. But to reduce the risk of unauthorised access, yes, they most certainly will do that," he says.

Before you start encrypting your files, you may want to check on the local law. For example, in the UK, the Regulation of Investigatory Powers Act requires a person who encrypts files to give police the key should they ask for it.

Still, open-source encryption for the masses is a big inducement for individuals to start protecting their data. Hopefully, the institutions storing our details see the need too.

Bernhard Warner is a former Reuters internet correspondent in Europe and senior editor for The Industry Standard Europe. He writes about technology, the internet and media industries and can be reached at techscribe@gmail.com

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