I am building a Joomla! 3.x component that connects to an API. The API settings are currently established in the component configuration. The configuration details are stored in plain text in the database, which is not desirable. Is it possible to instruct Joomla! to encrypt configuration data? If so, how is this done.
You can do this with a plugin I suppose, there are two events you would need to target.
On save the event name is "onExtensionBeforeSave" and on loading the saved details "onContentPrepareForm" to insure data integrity.
You can in the plugin target your component and those events. This is a good starting place on how to build a plugin.