Is it possible to encrypt calls on Android OS?
How do I do that?
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Yes with an app called redphone: http://www.appbrain.com/app/redphone-beta/org.thoughtcrime.redphone
Options are limited unfortunately.
If you want to make calls using your existing phone service with your existing number, then your best option is Red Phone from Whisper Systems. Of course, your calling partner will need to have the app to for the call to be encrypted.
If you don't mind using another service, take a look at OStel, a secure VOIP provider.