Rename 'kohana' to 'system' to conform to the Kohana filesystem layout. I'm comfortable with us not clearly drawing the distinction about the fact that it's Kohana.

system/config/encryption.php

@@ -0,0 +1,31 @@
+<?php defined('SYSPATH') OR die('No direct access allowed.');
+/**
+ * @package  Encrypt
+ *
+ * Encrypt configuration is defined in groups which allows you to easily switch
+ * between different encryption settings for different uses.
+ * Note: all groups inherit and overwrite the default group.
+ *
+ * Group Options:
+ *  key    - Encryption key used to do encryption and decryption. The default option
+ *           should never be used for a production website.
+ *
+ *           For best security, your encryption key should be at least 16 characters
+ *           long and contain letters, numbers, and symbols.
+ *           @note Do not use a hash as your key. This significantly lowers encryption entropy.
+ *
+ *  mode   - MCrypt encryption mode. By default, MCRYPT_MODE_NOFB is used. This mode
+ *           offers initialization vector support, is suited to short strings, and
+ *           produces the shortest encrypted output.
+ *           @see http://php.net/mcrypt
+ *
+ *  cipher - MCrypt encryption cipher. By default, the MCRYPT_RIJNDAEL_128 cipher is used.
+ *           This is also known as 128-bit AES.
+ *           @see http://php.net/mcrypt
+ */
+$config['default'] = array
+(
+	'key'    => 'K0H@NA+PHP_7hE-SW!FtFraM3w0R|<',
+	'mode'   => MCRYPT_MODE_NOFB,
+	'cipher' => MCRYPT_RIJNDAEL_128
+);