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Is it possible to implement Full Disk Encryption on a Virtual Machine Server or a Virtual Private Server?

Also, if it's possible, will the service provider (of the VPS) be able to decrypt/see my files on the VPS? And most importantly, will they be able to see the decryption password when I enter it?

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Supported options will depend on your service provider. Any encryption of drives etc only protects the data when it is not being accessed / used.

There is no practical encrypted processing at the moment; so if you are ever accessing / processing the decrypted files at the service provider, any intelligence agency with access to the data center, or the provider, will be able to lift the keys from the memory of the running processes.

If you encrypt and decrypt files locally and then process and store them on a cloud server without ever revealing the private keys to the remote server, or trusting any software from the hosting service you can store your data confidentially.

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