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Which method is more preferable in which situation ? Which process poses less stress over the cpu ?

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I'm not really an expert, and can only offer my opinion, which is that encrypting any folder requires CPU power whenever you read or write. Plus, there is a danger of losing data if you either forget the key, or if something happens to break the key. This means you should have a backup, and the bigger the directory that's encrypted, the bigger your backup needs to be. So, consider these factors in making your decision. – Marty Fried May 26 '12 at 19:54
Nice opinion Marty. I agree with you, but lets wait for some experienced user to answer :) – Curious Apprentice May 26 '12 at 20:03
But you should always have a backup of any important files, anyway, regardless of whether or not you encrypt them... (You can use encrypted backups if you want to avoid storing your files in cleartext anywhere.) – Eliah Kagan May 26 '12 at 20:29

Encrypting your entire home directory is a fairly comprehensive way to ensure that everything that's unique to you on your system gets encrypted before it's actually written to disk.

Alternatively, you can just encrypt a single folder. Anything you save or store in that directory will be encrypted before writing it to disk. Some people prefer this, but they typically have very specific needs, and know exactly what data they do and do not want to encrypt.

Encrypting all of home will cause slightly more load on your CPU than just encrypting a single directory. However, neither of them should cause a terribly noticeable load on your CPU.

Full disclosure: I'm the author and maintainer of Ubuntu's Encrypted Private, Encrypted Home directory feature and eCryptfs.

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If you have a private folder , encrypted with encfs, you could make encrypted remote backups of that folder to Ubuntu One.

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