A virtual optical encryption system is proposed. The system adopts the basic structure of in-line digital holography and the original image is taken as the object to be recorded. Two dependent random phase masks, which act as the encryption and decryption keys, are employed in both the reference light path and the interference field. The complex field in the hologram plane is the encryption result. The statistical properties of this technique is analyzed. It is shown that the encoding converts the input signal to stationary white noise if the scale coefficient is properly selected. Computer simulations prove the encryption effects and its robustness against brute-force attacks. The influence of noise and additional parameters on the decryption results is studied. The encryption system is not so robust to noise attack, but it is highly sensitive to additional parameters.