If encryption were done server-side, then I (website owner) would be able to read the contents of every notepad, which would defeat the whole purpose. You don't own your bitcoin unless you control the private keys, and your data is not private unless you encrypt it.
You got a point but the encryption takes place on the server side ,isn't it ? I upload my content,use one of the algorithms that "YOU" have implemented on the website to store the encrypted data.Now,since you have implemented the code,only you would know if it actually looks like what it is or data is being available at the back-end.