I created a sparse bundle to use as my Time Machine back up
hdiutil create -size 800g -encryption -type SPARSEBUNDLE -fs "HFS+J" -volname TimeMachineEncrypted TimeMachineEncrypted.sparsebundle
When I mount the drive I need to use my passphrase to decrypt it. Once mounted I examine the drive in Disk Utility and see that it is not encrypted.
What's the difference in encrypting the image bundle and the mounted drive? Is one better than the other performance, security, and automation wise?