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I don't understand the procedure here. There are some options to choose from to encrypt the file, but then I can't decrypt it because I don't have the password. How do I create a password before I encrypt?
First, create a key:
Select Applications->System Tools->Preferences->Passwords and Keys
Select File->New and select "PGP Key" and click Continue.
Fill in the details of choice and click Create.
Then right-click any file and select "Encrypt" and select the newly created key to encrypt the file.