Amazon EC2 uses public-key cryptography to encrypt and decrypt login information. Public–key cryptography uses a public key to encrypt a piece of data, and then the recipient uses the private key to decrypt the data. The public and private keys are known as a key pair. Public-key cryptography enables you to securely access your instances using a private key instead of a password.
When you launch an instance, you specify the key pair. You can specify an existing key pair or a new key pair that you create at launch. At boot time, the public key content is placed on the instance in an entry within ~/.ssh/authorized_keys. To log in to your instance, you must specify the private key when you connect to the instance. For more information