Difference between encoding and encryption
Encoding transforms data into another format using a scheme that is publicly available so that it can easily be reversed.
Encryption transforms data into another format in such a way that only specific individual(s) can reverse the transformation.
For Summary -
Encoding is for maintaining data usability and uses schemes that are publicly available.
Encryption is for maintaining data confidentiality and thus the ability to reverse the transformation (keys) are limited to certain people.
More details in SOURCE
Encoding:
Purpose: The purpose of encoding is to transform data so that it can be properly (and safely) consumed by a different type of system.
Used for: Maintaining data usability i.e., to ensure that it is able to be properly consumed.
Data Retrieval Mechanism: No key and can be easily reversed provided we know what algorithm was used in encoding.
Algorithms Used: ASCII, Unicode, URL Encoding, Base64.
Example: Binary data being sent over email, or viewing special characters on a web page.
Encryption:
Purpose: The purpose of encryption is to transform data in order to keep it secret from others.
Used for: Maintaining data confidentiality i.e., to ensure the data cannot be consumed by anyone other than the intended recipient(s).
Data Retrieval Mechanism: Original data can be obtained if we know the key and encryption algorithm used.
Algorithms Used: AES, Blowfish, RSA.
Example: Sending someone a secret letter that only they should be able to read, or securely sending a password over the Internet.
Reference URL: http://danielmiessler.com/study/encoding_vs_encryption/
Encoding is the process of transforming data so that it may be transmitted without danger over a communication channel or stored without danger on a storage medium. For instance, computer hardware does not manipulate text, it merely manipulates bytes, so a text encoding is a description of how text should be transformed into bytes. Similarly, HTTP does not allow all characters to be transmitted safely, so it may be necessary to encode data using base64 (uses only letters, numbers and two safe characters).
When encoding or decoding, the emphasis is placed on everyone having the same algorithm, and that algorithm is usually well-documented, widely distributed and fairly easily implemented. Anyone is eventually able to decode encoded data.
Encryption, on the other hand, applies a transformation to a piece of data that can only be reversed with specific (and secret) knowledge of how to decrypt it. The emphasis is on making it hard for anyone but the intended recipient to read the original data. An encoding algorithm that is kept secret is a form of encryption, but quite vulnerable (it takes skill and time to devise any kind of encryption, and by definition you can't have someone else create such an encoding algorithm for you - or you would have to kill them). Instead, the most used encryption method uses secret keys : the algorithm is well-known, but the encryption and decryption process requires having the same key for both operations, and the key is then kept secret. Decrypting encrypted data is only possible with the corresponding key.