I actually think I may have come up with a biological analogy to encryption.
If you define encryption as taking information, breaking it up into random pieces or just small packets of data, that are sent on their way and when they reach a source are put back together based on a key, so that unintended recipients cannot interpret the information, then I would say that how the senses process the information that we experience, process it, send it along its way and then it is recompiled to form our experience of reality, is something akin to encryption/decryption.
Take vision. Our eye receives and focuses photons of light into electrochemical signals that get relayed to the visual cortex. In the visual cortex, that data is reassembled into our experience of reality of the world around us.
If, experimentally, we were able to tap into that signal running along the optic nerve and tried to interpret it just from the data flow, then it is unlikely that we would be able to reproduce the image being collected the way we could read the electrical impulse being transmitted from a CMOS or CCD sensor chip. I say this because our visual system is predictive. There is actually more information generated by the visual cortex than is being received and transmitted from the eyes.
We develop these keys in early child development and lay down these neural networks so that we are able to build and interpret an image without all of the data. This is how we can navigate through the world, drive a car, fly a jet fighter and cope with the signal delay that is inherent in the system. This may be more an example of compression of signal, but a compressed signal without the correct decompression algorithm would be a rudimentary form of encryption.
We can also see, with synesthesia, that when there is crosstalk between the regions of the brain that are are different from the norm, messages will be perceived in possibly unintended ways. Letters and numbers have colors, sounds produce visual imagery, etc.