TrueCrypt is a free software that creates on-th-fly encrypted volumes. You can create a file and mount it to a disk drive or you can create a partition. TrueCrypt encrypts and decrypts data without your intervention. The data is stored encrypted and the files are decrypted in RAM.
When you boot your operating system, TrueCrypt will ask you the password, in order to mount the volume and use it. If your encrypted container is a file, you can burn it on a CD or copy it to an USB drive, along with TrueCrypt, to use it on another computer (note that you need admin privileges).
The software uses many encryption algorithms, including AES, Blowfish, Triple DES, Twofish and various combinations, but you can stick to AES.
So why is this useful? If you deal with sensitive documents, confidential information or you just need to hide some files from unauthorized access, TrueCrypt is handy. Even if someone has direct access to your disk, he can't tell the file or partition is encrypted and if he knows the volume is encrypted, he can't access it without knowing the password (if the password is strong, it may take years or even centuries until the code is found).
The software is available for Windows 2000/ XP and Linux and it's open source.
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