How to enable server-side encryption in Nextcloud

Out of the box, Nextcloud servers encrypt remote data (such as from Dropbox and Google), but your local storage is saved sans encryption. To some users, that is unacceptable. Fortunately, the developers of Nextcloud make it possible to enable server-side encryption. Even though the encryption does increase the file size by 35%, this should be a must-have for anyone concerned about security.