You can even create master keys in any of the system databases, but I would not recommend doing so in model or tempdb as these could cause you issues at a later time. This means you can have a separate DMK in each database on your instance. The DMK is the basis for encryption inside each database.
The basis is the DPAPI (Data Protection API) at the Windows layer and this continues through the various keys available in the databases. The encryption hierarchy inside SQL Server is in Books Online, the image of which is reproduced below. This article will examine the basics of the DMK, how it is used and how you can ensure you don't lose access to your data. The basis for security in many of your databases is the Database Master Key (DMK).
SQL Server includes a number of encryption features and capabilities that you can use to secure your systems.
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