OTFE
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On-the-fly encryption (OTFE) is a term often used when referring to disk encryption software. "On-the-fly" refers to the fact that the files are accessible immediately after providing the key, and the entire volume is typically mounted as if it were a physical drive, making the files just as accessible as any unencrypted ones.
On-the-fly encryption requires the use of device drivers enabling the encryption process to be transparent to the end user. As superuser-like access is required to install such drivers, encrypted volumes may be inaccessible without sysadmin-approval. Typical advantages of OTFE are that encryption takes place without user intervention, and that a single password encrypts almost unlimited data. Disadvantages are that poorly written implementations may have lots of overhead, and a crash in OTFE software may lead to data loss.
In general, every method in which data is transparently encrypted on write and decrypted on read can be called on-the-fly encryption (OTFE).