PGP Encryption is Mandatory on Tor sites like Silk Road and others where your personal information(such as messages to others) needs to be very secure.
it is just good to practice privacy and security in general. There are also many legal sites such as bitcoin exchanges(vaultofsatoshi) that give you the option to communicate through email with them using public and private keys.(in fact they recommend to communicate like this).
This is always good for signing messages as well, so you know for sure you are talking to who they say they are.

PGP is basically used for 3 things.
1) Encrypting a message or file so that only the recipient can decrypt and read it. The sender, by digitally signing with PGP, can also guarantee to the recipient, that the message or file must have come from the sender and not an impostor. (So you can send a coded, signed e-mail to your lover and ONLY your lover will be able to decode it and your lover will KNOW that the e-mail came from you.)


2) Clear signing a plain text message guarantees that it can only have come from the sender and not an impostor. In a plain text message, the text is readable by anyone (i.e. is 'plain') but a PGP digital signature is attached. So, Alice posts some comments about black holes to one of the sci.astro news groups. She mustn't encrypt the comments because she WANTS people to read them. But Alice wants anyone with PGP to know that it was her who posted the comments - so Alice digitally signs the posting with PGP. nb Alice and all other PGP users can subsequently prove that she posted the comments. Be careful about what you put in signed postings as it is difficult to deny, later, that the contents of a message were sent by you!


3) Encrypting computer files so that they can't be decrypted by anyone other than the person who encrypted them. (So, you CAN stop your family reading your poetry.)


How it works:

Also known as asymmetric-key encryption
Public key, private key
The basic concept is this: You generate a pair of matched keys. One of these is referred to as your "Public" key, and the other as "Private". You give the Public key to anyone who asks for it; you can even publish it on your web site. You keep your Private key secret, locked up on your own computer. A document (a text or binary file) can be encrypted using either key, and is decrypted with the other. The choice of which key to use to encrypt depends upon your purpose.


For example, if you want to send me something, you'd encrypt it using my public key. No one else can decrypt it; only my private key will work. On the other hand, I might be concerned that it really is you sending me a message. In that case, you'd encrypt your message using your private key (this is called "signing"). If I can decrypt it with your public key (presumably I somehow obtained that key and trust that it really is yours), I know that the message really came from you.

Basically using the software Kleopatra from Gpg4win you will create a public and a private set of keys. In your Kleopatra client you will have a Key ring, This is where you store your public keys given to you from other ppl. When you need to send your friend "John" an encrypted message you will use "Johns" "Public Key" to Encrypt the message.
That way only john can read it. He will have to decrypt it with his Private key.

When you are creating your public and private keys it will ask you to input a name, an email address and a comment. This is really only used so you know who's key is who's when you have a bunch of different public keys in your key ring. You DO NOT have to input your real email address or name when creating them. However it is a good idea to use a user name that someone will remember who you are down the road. You can have multiple private and public keys for your different sites if need be.


For further reading and tutorials and how to:http://www.gpg4win.org/doc/en/gpg4win-compendium_6.html

Kleopatra Handbook: http://docs.kde.org/stable/en/kdepim.../kleopatra.pdf

To download the software for windows: http://www.gpg4win.org/