Encryption is a method of protecting information from people who are not supposed to see it. Encryption is beneficial whenever you have data that you do not want to be viewed without your permission.
Consequently, if you store sensitive personal, business, or financial information in the cloud, it's usually a good idea to encrypt the files. Similarly, if you keep any sensitive information on your Mac, it's usually a good idea to turn on File Vault (and if you use Time Machine for backups, turn on Time Machine's encryption) as protection in case your computer is lost or stolen.
You are unlikely to notice much effect on your day-to-day use from encryption unless your hardware is really old, say, more than 8 years old.
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Encryption, however, does not protect you from
ransomware attacks. In fact, ransomware
uses encryption to force victims to pay. It is even possible for a ransomware criminal to encrypt a previously encrypted file a second time. The main defense against ransomware is to keep multiple backups of your data, with at least one backup kept physically disconnected from your computer except when it is being updated.
For example, I use two hard discs for backing up my iMac. One HD uses Time Machine and is always connected. The other HD uses Carbon Copy Cloner and is only hooked up to my machine once a week. That way, if I get hit by a ransomware attack, there is a good chance my Carbon Copy Cloner backup will not be affected.
Another defensive measure you can take is to install a utility called
RansomWhere? that is available here:
https://objective-see.com/products/ransomwhere.html . Have a look at the webpage...and if you feel overwhelmed or confused by what's there, you might be better off not downloading it.