How does the following work?
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These are a mix of technologies and products.
Passwords provide authentication (prove an identity who or what it is).
Encryption provides confidentiality (scramble the information so no unauthorized party can steal it).
A firewall is typically a product (software, hardware or both) that is located at the periphery of a company's network to attach to the Internet. Firewalls use filtering and other techniques (including passwords) to ensure that only authorized traffic gets into the customer network.
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