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What are the risks involved with sending unencrypted data over the internal network with Rackspace Cloud Servers?

Assume the interfaces use iptables to filter IPs and ports so they only accept data from other trusted servers within the internal network. Let's also assume that we trust our provider, Rackspace, but not all the other servers in the internal network.

Rackspace says they block IP spoofing and network sniffing.

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Then the risk of getting sniffed is low. You could do some test to see if what they are saying is true. If you really trust rackspace you can send data unencrypted. If your data is really critical or sensitive ... Encrypt it anyway just in case ;)

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