How does quantum encryption work? There has been a lot of buzz about quantum computing especially with D-Wave breaking the limits each month. I have basic knowledge about cryptography with an introductory course in quantum computing.

So, how does quantum encryption work? and how is it different in principle from the current practices adopted?
There are a few key distinctions to make
Quantum cryptanalysis
This is what you hear all the buzzing about. Specifically, there is something called Shor's algorithm, that when used to break modern crypto, can be devastating. If you've encrypted a zip file and told someone the key you're quite safe. But things like PGP and SSL, where you have to agree to a key online, are vulnerable; quantum algorithms have about an impact of O(n/2) on symmetric crypto decrease the effective key size by half for symmetric crypto. That means AES-256 will be as strong as a pre-quantum AES-128. RSA will be much worse off:

Shor’s Algorithm, which can only be executed on a quantum computer, can factor large numbers in $\log(n)^3$ time, which is drastically better than the best classical attack.  [Normally RSA2048] takes about $10^{41}$ units of time ...  Using Shor’s algorithm, the same problem only $10^3$

This is not something D-Wave can do yet. As far as we know.

Geordie (chief technology officer of D-Wave) on June 2, 2011, at 3:59 pm
said:
We do have a factoring algorithm that I’m going to do a series of blog posts on (the working title is “Better than Shor” :-) ).

-- https://dwave.wordpress.com/2011/05/11/learning-to-program-the-d-wave-one/
After that they never mentioned this again. Either he was wrong or
someone told him to shut up about it.

Quantum Key Distribution
This is what the other answer mentions, and this is something we can do today, and because of that, there's some hype about it. What it comes down to is that you have a guarantee that the code has not been intercepted in transit, because any observation would affect the quantum state. But it's really slow for now.
Post-quantum cryptography
These are simply crypto schemes designed to withstand algorithms like Shor's. An implementation is McElieces'; some fascinating work based on the hardness of breaking linear error-correcting codes. Other asymmetric implementations are based on lattices.