Database user passwords are stored as hashes (determined by the setting password_encryption), so the administrator cannot determine the actual password assigned to the user. If SCRAM or MD5 encryption is used for client authentication, the unencrypted password is never even temporarily present on the server because the client encrypts it before being sent across the network. SCRAM is preferred, because it is an Internet standard and is more secure than the PostgreSQL-specific MD5 authentication protocol.

The pgcrypto module allows certain fields to be stored encrypted. This is useful if only some of the data is sensitive. The client supplies the decryption key and the data is decrypted on the server and then sent to the client.

The decrypted data and the decryption key are present on the server for a brief time while it is being decrypted and communicated between the client and server. This presents a brief moment where the data and keys can be intercepted by someone with complete access to the database server, such as the system administrator.

Storage encryption can be performed at the file system level or the block level. Linux file system encryption options include eCryptfs and EncFS, while FreeBSD uses PEFS. Block level or full disk encryption options include dm-crypt + LUKS on Linux and GEOM modules geli and gbde on FreeBSD. Many other operating systems support this functionality, including Windows.

This mechanism prevents unencrypted data from being read from the drives if the drives or the entire computer is stolen. This does not protect against attacks while the file system is mounted, because when mounted, the operating system provides an unencrypted view of the data. However, to mount the file system, you need some way for the encryption key to be passed to the operating system, and sometimes the key is stored somewhere on the host that mounts the disk.

SSL connections encrypt all data sent across the network: the password, the queries, and the data returned. The pg_hba.conf file allows administrators to specify which hosts can use non-encrypted connections (host) and which require SSL-encrypted connections (hostssl). Also, clients can specify that they connect to servers only via SSL. Stunnel or SSH can also be used to encrypt transmissions.

It is possible for both the client and server to provide SSL certificates to each other. It takes some extra configuration on each side, but this provides stronger verification of identity than the mere use of passwords. It prevents a computer from pretending to be the server just long enough to read the password sent by the client. It also helps prevent “man in the middle” attacks where a computer between the client and server pretends to be the server and reads and passes all data between the client and server.

If the system administrator for the server's machine cannot be trusted, it is necessary for the client to encrypt the data; this way, unencrypted data never appears on the database server. Data is encrypted on the client before being sent to the server, and database results have to be decrypted on the client before being used.