The Encrypting File System (EFS) is a feature of the Windows 2000 operating system that lets any file or folder...
be stored in encrypted form and decrypted only by an individual user and an authorized recovery agent. EFS is especially useful for mobile computer users, whose computer (and files) are subject to physical theft, and for storing highly sensitive data.
EFS simply makes encryption an attribute of any file or folder. To store and retrieve a file or folder, a user must request a key from a program that is built into Windows 2000.
Although an encrypting file system has existed in or been an add-on to other operating systems, its inclusion in Windows 2000 is expected to bring the idea to a larger audience.