I'd like to encrypt the user data I store on my server so that it is safe if my server were to be compromised. Is the following a good way to do it:
Each user's password is the passphrase to a GPG keypair. All the user's data is encrypted using the public key before being saved to the database. The password is discarded and the keypair is kept only for the duration of the session, so the data can only be decrypted when the password is supplied.
From the point of view of someone compromising your server, the only way to ensure the data is safe is the way you are doing, when the user have to supply the key to decrypt every time.
Any other technique leaves some weakness that could be exploited.
But you have to be sure the other way (I mean when user provides the password) is secure too, using https and preventions against session attacks, cross scripting and etc.
If you do not have specific hardware to do an extra line of protection as when they are generated pseudo-random numbers based on time (as do the banks tokens) or something like that, the best idea is to keep the keys with the user or to use a third part storage with greater security as the SQL on Azure or Amazon.
I used the same approach after thought a lot about where to put my encrytion keys to make data obscure even if my server got compromised. The only secure way I found was "with the user".
your approach protects you from only 1 attack: stealing your database (and only if you encrypted keys properly). if your server gets compromised they can take your ssl private key and listen your network traffic (with users' keys)
