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Gmail has always supported encryption in transit by using Transport Layer Security (TLS), and will automatically encrypt your incoming and outgoing emails if it can. The important thing is that both sides of an email exchange need to support encryption for it to work; Gmail can't do it alone.
Our data show that approximately 40 to 50 percent of emails sent between Gmail and other email providers aren’t encrypted. Many providers have turned on encryption, and others have said they’re going to, which is great news. As they do, more and more emails will be shielded from snooping.
For people looking for even stronger email security, end-to-end encryption is a good option—but it’s been hard to use. So today we’re making available the source code for End-to-End, a Chrome extension. It's currently in testing, and once it's ready for general use it will make this technology easier for those who choose to use it.
Google's Chrome Extension, "End-to-End" Email Encryption, Released For Testing [googleblog.blogspot.com]