Windows 8.1 will automatically encrypt the storage on modern Windows PCs. This will help protect your files in case someone steals your laptop and tries to get at them, but it has important ramifications for data recovery.

Previously, “BitLocker” was available on Professional and Enterprise editions of Windows, while “Device Encryption” was available on Windows RT and Windows Phone. Device encryption is included with all editions of Windows 8.1 — and it’s on by default.

When Your Hard Drive Will Be Encrypted

Windows 8.1 includes “Pervasive Device Encryption.” This works a bit differently from the standard BitLocker feature that has been included in Professional, Enterprise, and Ultimate editions of Windows for the past few versions.

Before Windows 8.1 automatically enables Device Encryption, the following must be true:

• The Windows device “must support connected standby and meet the Windows Hardware Certification Kit (HCK) requirements for TPM and SecureBoot on ConnectedStandby systems.”  (Source) Older Windows PCs won’t support this feature, while new Windows 8.1 devices you pick up will have this feature enabled by default.
• When Windows 8.1 installs cleanly and the computer is prepared, device encryption is “initialized” on the system drive and other internal drives. Windows uses a clear key at this point, which is removed later when the recovery key is successfully backed up.
• The PC’s user must log in with a Microsoft account with administrator privileges or join the PC to a domain. If a Microsoft account is used, a recovery key will be backed up to Microsoft’s servers and encryption will be enabled. If a domain account is used, a recovery key will be backed up to Active Directory Domain Services and encryption will be enabled.

If you have an older Windows computer that you’ve upgraded to Windows 8.1, it may not support Device Encryption. If you log in with a local user account, Device Encryption won’t be enabled. If you upgrade your Windows 8 device to Windows 8.1, you’ll need to enable device encryption, as it’s off by default when upgrading.

Recovering An Encrypted Hard Drive

Device encryption means that a thief can’t just pick up your laptop, insert a Linux live CD or Windows installer disc, and boot the alternate operating system to view your files without knowing your Windows password. It means that no one can just pull the hard drive from your device, connect the hard drive to another computer, and view the files.

We’ve previously explained that your Windows password doesn’t actually secure your files. With Windows 8.1, average Windows users will finally be protected with encryption by default.

However, there’s a problem — if you forget your password and are unable to log in, you’d also be unable to recover your files. This is likely why encryption is only enabled when a user logs in with a Microsoft account (or connects to a domain). Microsoft holds a recovery key, so you can gain access to your files by going through a recovery process. As long as you’re able to authenticate using your Microsoft account credentials — for example, by receiving an SMS message on the cell phone number connected to your Microsoft account — you’ll be able to recover your encrypted data.

With Windows 8.1, it’s more important than ever to configure your Microsoft account’s security settings and recovery methods so you’ll be able to recover your files if you ever get locked out of your Microsoft account.

Microsoft does hold the recovery key and would be capable of providing it to law enforcement if it was requested, which is certainly a legitimate concern in the age of PRISM. However, this encryption still provides protection from thieves picking up your hard drive and digging through your personal or business files. If you’re worried about a government or a determined thief who’s capable of gaining access to your Microsoft account, you’ll want to encrypt your hard drive with software that doesn’t upload a copy of your recovery key to the Internet, such as TrueCrypt.

How to Disable Device Encryption

There should be no real reason to disable device encryption. If nothing else, it’s a useful feature that will hopefully protect sensitive data in the real world where people — and even businesses — don’t enable encryption on their own.

As encryption is only enabled on devices with the appropriate hardware and will be enabled by default, Microsoft has hopefully ensured that users won’t see noticeable slow-downs in performance. Encryption adds some overhead, but the overhead can hopefully be handled by dedicated hardware.

If you’d like to enable a different encryption solution or just disable encryption entirely, you can control this yourself. To do so, open the PC settings app — swipe in from the right edge of the screen or press Windows Key + C, click the Settings icon, and select Change PC settings.

Navigate to PC and devices -> PC info. At the bottom of the PC info pane, you’ll see a Device Encryption section. Select Turn Off if you want to disable device encryption, or select Turn On if you want to enable it — users upgrading from Windows 8 will have to enable it manually in this way.

Note that Device Encryption can’t be disabled on Windows RT devices, such as Microsoft’s Surface RT and Surface 2.

If you don’t see the Device Encryption section in this window, you’re likely using an older device that doesn’t meet the requirements and thus doesn’t support Device Encryption. For example, our Windows 8.1 virtual machine doesn’t offer Device Encryption configuration options.

This is the new normal for Windows PCs, tablets, and devices in general. Where files on typical PCs were once ripe for easy access by thieves, Windows PCs are now encrypted by default and recovery keys are sent to Microsoft’s servers for safe keeping.

This last part may be a bit creepy, but it’s easy to imagine average users forgetting their passwords — they’d be very upset if they lost all their files because they had to reset their passwords. It’s also an improvement over Windows PCs being completely unprotected by default.