How the Best Secure File Sharing Systems Actually Work

File Sharing These days, an increasing number of businesses have begun making the transition from physical data rooms to virtual storage. In fact, one survey found that more than 50% of businesses use some form of cloud data storage—and for good reason. Not only does virtual data storage save space, but it also makes for more convenient file access. Rather than having to dig through countless filing cabinets to locate a specific document, virtual data storage makes it possible to access digital files remotely, from the convenience of a personal computer or other electronic device.

File Sharing

Still, when it comes to electronic data storage, not all solutions are created equal in terms of security. Traditional cloud storage solutions simply don’t offer the high level of security that’s needed for storage of sensitive documents, such as intellectual property and personal information. For this reason, many businesses and agencies alike are opting to store their digital files in a virtual data room that goes above and beyond to provide enhanced and innovative security features. As a result, companies are able to enjoy greater peace of mind and confidence that their files are safe.

So, how do the best virtual data rooms actually work when it comes to keeping file sharing as secure as possible? This article explores a few of the key technical and human security features offered by virtual data rooms such as SecureDocs.

Technical Security

Technical security features refer to those that are built into the service’s software and coding itself. These include data encryption, 2-factor authentication, and permissions management.

Data Encryption

Data encryption is one of the most essential yet common types of security offered by a virtual data room. Essentially, the purpose of data encryption is to render sensitive information unreadable through the use of a special algorithm. For instance, when you upload a file to a virtual data room with encryption, the text within the file is automatically encrypted so that it’s unreadable to the naked eye. In other words, it’s translated into a special code that only the system has the capability (or “key”) to crack. From there, the data can only be de-coded by another computer or user that also carries the “key” to do so.

Data encryption plays a vital role in keeping files safe when uploaded to a virtual data room. This type of security ensures that only authorized users or computers are able to view the de-coded versions of your files. This way, in the event of any kind of security breach or hack, the perpetrator only sees the encrypted version of the file and is thus unable to extrapolate any sensitive information out of it. Interestingly enough, data encryption was first used to share sensitive government and military data over the internet securely; today, it’s used in file sharing and even online credit card processing.

Without data encryption, files uploaded to a virtual server would be at a much higher risk of being viewed by unauthorized individuals. Of course, not all encryption is created equal. With enough computing power, some encryption can be broken using a sheer force of combinations. Using encryption like Bcrypt, which is intentionally designed to take a great deal of computing power to get past, can help you be extra secure.

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2-Factor Authentication

Another important security feature worth looking for in a virtual data room is that of 2-factor authentication. In simplest terms, 2-factor authentication refers to a process where additional steps are taken to verify a person’s identity before allowing them to complete a specific action. It can be helpful to look at a common example of 2-factor authentication in the real-world in order to gain a better understanding of it.

Think about the last time you went to withdraw money from an ATM. You inserted your card into the machine, but before you were able to withdraw money or take any other actions with your account, you were asked to enter a PIN. This is an example of 2-factor authentication at work. Theoretically, anybody could gain access to your bank card (whether by stealing yours out of your wallet or by making a copy), but it’s likely that you’re the only one who knows your ATM PIN. In this sense, 2-factor authentication at the ATM can be a great way to prevent fraud and theft.

2-factor authentication in a virtual data room is similar. Typically, it will involve having authorized users pass through two different types of identity verification before letting them access any files on the shared network. For example, in addition to entering a correct username and password, a user attempting to log in may also need to complete a mobile identification step. In this verification step, a unique code is texted to the phone number associated with that username. Only by entering this unique code will the user be able to continue the process of logging in and accessing any of the files within the virtual data room.

Choosing a virtual data room that offers 2-factor authentication is important because it helps to prevent unauthorized users from obtaining access to sensitive files and information. This way, even if a person’s username and password are compromised for any reason, the second step of the authorization process would theoretically prevent the user from logging in.

Permissions-based User Roles

Permission-based user roles in a virtual data room makes it possible for administrators to control who is able to access certain folders and documents. After all, there are situations where a user may only need access to one document or one folder of documents related to a certain task or project. With permissions management, it’s easy to designate specific levels of access with just a few clicks. Specifically, an administrator can choose which users have access to which aspects of the data room. Some users may be given full access, whereas others may be given View Only access to specific folders or files.

The ability to set varying levels of user access is a must because it bolsters data security and ensures that sensitive information doesn’t get into the wrong hands—even within the organization or agency. This can especially come in handy for larger companies or agencies, where different departments may need access to different aspects of the data.

Human Security

In addition to technical security features offered in some of today’s virtual data rooms, there are also a number of human-based security features that are worth exploring. Human-based security is important because in most cases of security breaches, the problem isn’t some random person hacking their way into the system. Breaches are often the result of somebody giving access to an unauthorized individual, printing out or sharing files, or not being careful enough with their passwords. In this sense, as much as technology security matters, human security features as perhaps just as important.


You’re probably already familiar with the concept of watermarking, as you likely encounter it on a daily basis. For example, when you pay with a $100 bill at the grocery store, the cashier may hold the bill up to look for the watermark or even use a special pen to ensure that the bill is, in fact, real and not just a forgery. This same concept can actually apply to digital documents to provide added security, though in a slightly different way.

Digital watermarks can be either visible or hidden. The purpose of adding visible watermarks to an electronic document is to remind the person viewing the document that the information is sensitive and that unauthorized copies are not permitted, and that the information should not be shared with any unauthorized users. This helps to deter any intentional or even unintentional sharing of information.

With a digital watermark, the watermark itself may contain personally identifiable information so that in the event that the document is printed or shared without authorization, it’s easy to determine the source of the leak. This is an important security feature for any virtual data room because it discourages users from sharing information in any way that’s not authorized. In cases of a visible watermark, the watermark itself may also help to physically distort or block out information in the event that the document is printed without authorization.

Download/Printing Control

Much like administrators may be able to control which users are able to view and/or edit certain documents or folders, this added security feature also makes it possible to control who is able to download and print certain documents. Specifically, administrators have the ability to mark certain files or folders as View Only to specific users, which means they’re only able to open the document; they are unable to print it, edit it, or even download it.

Download and printing control in a virtual data room is a great way to prevent unauthorized printing and sharing of documents that contain sensitive information. Instead, the user is only allowed to view the information that’s needed while he or she is logged into the data room. This security feature, when combined with the use of digital watermarks, is a great way to boost security when it comes to the online sharing of files.

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Audit Logs

An increasing number of virtual data platforms have also begun to incorporate the use of audit logs into their security features. Specifically, audit logs provide an extremely detailed record of all activity from all users within any given data room, including:

  • Dates and times logged in
  • Actions taken within the platform
  • Files accessed
  • Any edits or changes made

The purpose of audit logs is to help administrators find out exactly what users are doing with documents and other potentially sensitive information while they’re logged into the platform, providing complete visibility and added peace of mind. For example, an audit log could pick up instances where multiple failed log-in attempts were made to a certain user’s account. This could make administrators aware of a potential security threat or attempted breach of security. Furthermore, if unauthorized changes are made to a document, an audit log will be able to determine which user made these changes and may even be able to help revert those changes back.

Another main value admins get from an audit log has to do with understanding the actions of a particular user in order to gauge an investor or buyer’s level interest in a deal. For instance, if a certain user is diligently reviewing documents or spending a long time with a certain one, you can assume that it is of interest. This might indicate an interested investor—or, if deals fall through, it might indicate a document your company needs to take a look at and improve.

Overall, audit logs play a vital role in increasing accountability within any virtual data room. If users know that activity is being logged, they understand that their actions are traceable and will act accordingly. Additionally, audit logs also give administrators the tools and information to gain a better understanding of how data and files within the virtual data platform are being used.