128-Bit Encryption means a Encryption System which uses a key with 128 Bit length.(Example: IDEA) It is not dependent on any other program such as a Browser.
If you are using a nonsymmetric algorithm (SSL, Diffie-Helman) the keys are much more longer.
Specifically for Internet Explorer what 128 bit encryption means is that certain sites....such as banks,credit cards etc.. tell internet explorer to send all packets over the internet encrypted. What this means is say your credit card number is 1111 1111 1111 1111 in binary this is 11011110101111010000000111000111 the binary is then modified by the 128 bit encryption so that when it travels over the internet it can not be viewed by other people. Only the bank has the proper "key" to understand what your true data is....
I think a secure transfer of bank data etc. is done by SSL which is based on a private/public-key method (RSA) whith at least 512 Bit. This method is required to identify the sender.
But perhaps i am wrong.
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