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How can I have an encrypted Time Machine backup on my Time Capsule?

The option is in Time Machine preferences, but greyed out. Anyone know of hacks/workarounds to make this work?

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This gentleman describes the process in full and he knows what he's talking about.

He uses a Time Capsule and 2 MacBook Airs for his setup.

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Encryption can only be done on a directly connected drive via USB, Firewire, or Thunderbolt port. Wireless drives, such as time capsule, are not supported for encryption.

Sources: 1 2 and it was asked here on apple.stackexchange.

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You can have encrypted backups and use a time capsule, but you'll need to create an encrypted sparse bundle file and copy it to the Time Capsule. See the link provided. – skub Aug 6 '11 at 23:10
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