Encryption protects files by converting them into unreadable formats unless the correct decryption key is provided. The CompTIA ITF+ FC0-U71 Official Study Guide explains: "Encryption is the process of converting data into a secure format that cannot be read without a decryption key. Only users with the proper key can access the original data." File permissions control user access based on OS-level rules, but encryption specifically ensures that only those with the key can read the file even if they access the file storage. Hidden folders merely conceal files but don't protect content. Compression reduces file size but doesn't protect access. Reference: