TrueCrypt is about as good as free encryption software gets. I've yet to see a better alternative for those looking to secure the contents of a thumb drive or hide sensitive data on their own systems. And now, with its latest 7.0 release, TrueCrypt has become even better by adding hardware acceleration via Intel's nifty new AES-NI instructions.
AES-NI instructions were introduced with Intel's 32-nano Westmere silicon, which can be found in the dual-core Core i5 family, six-core Core i7s, and a slew of mobile duallies. There are six instructions in total; four are dedicated to AES encryption and decryption, while two are related to AES key expansion. TrueCrypt only appears to take advantage of the former, so you'll still be stuck with spastic mousing to come up with a key. Users can, however, look forward to a 4-8X increase in encryption performance thanks to hardware acceleration.
Interestingly, TrueCrypt's AES-NI mojo appears to deviate from the software's open-source roots. In its hardware acceleration notes, TrueCrypt's developers suggest disabling hardware acceleration for those who wish to use a "fully open-source implementation of AES." Thanks to LifeHacker for the tip.
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