Can encryption protect all sensitive data?

Due to the frequent loss of data not only from our online PC, also from government, organization etc., there are numerous advice that we have to use encryption to protect our data.

I am also working on encryption for my clients for a number of years. Frankly speaking, I am still not confident that protection is true.

First, if we use encryption for our data, that means there is a decryption tool in our PC for us to work with the data. Will hacker just take the data files and not the decryption tool? Can we suppose that hackers did not know that our data is encrypted?

Second, it is certain that no program of any level can be protected again reverse engineering. That is, the encryption method cannot be protected. Once a hacker found out the encryption method, the encrypted data would be at risk.

Last, I still wonder why so few people have that knowledge that a cracking method called Rainbow, can decrypt any know encryption method no matter how long the key is. Some still assume that hackers would need a giant computer and work for a year to decrypt. In simple words, they thought that hackers are stupid as them.

I have thought of putting the program in a removable media like CD, USB disk etc. But it may not be accepted by users for such trouble. No one would care without suffering experience. By doing so may let my clients turn away from me.

There is a fact; hackers will not spend time on everything. It is their cost. They may prefer to get the credit card information from clearing centers, banks etc. instead of picking one by one from individual.

Until now, the best way is to have the data files stored away from networks.