Yes: data is both sent over an encrypted connection to the storage cloud and stored encrypted on the server. Encrypted storage on the server requires your WordPress install to be running PHP 5.3 or later (which is very likely – the PHP version before that, 5.2, was end-of-lifed in January 2011).
You can also encrypt your database with a passphrase only known to you (whether for storing in UpdraftVault, or any other remote storage method) using the option in the ‘Settings’ tab in your UpdraftPlus page in your WordPress dashboard.
Posted in: UpdraftGold, UpdraftPlus Vault
