Yes, the communication between devices and the Particle cloud is encrypted. For the Photon, using AES/RSA. For the Electron, using DTLS. These protocols also securely identify both sides using public key cryptography.
Thanks. It’s a shame the MQTT library doesn’t support TLS/SSL as of yet, it would be so much cleaner for me to go Electron>MQTT Broker(encrypted) opposed to Electron>Particle Cloud>Database(via WebHook)>MQTT Broker