Re:Encryption detail? (Score 5, Informative)

I'm the TL for Google Compute Engine and was the speaker at that talk. The answer is a little more subtle than that. We have two types of mountable disk -- ephemeral disk which stays on the physical machine and never leaves the machine and persistent disk that outlives an instance is written over the network.

For ephemeral disk, we generate the encryption key on the host machine and it only ever stays in memory. We are careful to control the code paths that see the key material.

For the persistent disk, by necessity, we need to manage the key as part of our overall virtual machine management infrastructure. We utilize some strongly audited and auditable systems to wrap the encryption keys and really lock down the users that have access to the unwrapping service. The name of the game here is to restrict the scope as much as possible.

BTW -- the video for the talk isn't up yet but I just shared the slides here: https://plus.google.com/110707185519531431463/posts/EfDCBjuPiPf.