>It’s obvious the application server must be able to read the decrypted data
replyInterestingly, that's not true. Homomorphic encryption can let you perform the same operations on encrypted data as on the plaintext, with the same results once decrypted. But it's vastly slower and less efficient - I know there are libraries like Microsoft SEAL but I've never seen anything that uses it in practice.
Let's say the application is storing user's phone number so it can send SMS notifications to the user. Encrypt it all you want, but when it is time to send the SMS you will need the phone number in plaintext so you can pass it to the SMS gateway.
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