As of the August 2013, all customer data on Google Drive is encrypted automatically, free of cost.
Files uploaded to the drive will be encrypted as they are uploaded and before they are saved to the drive.
Google Drive uses 128-bit Advanced Encryption Standard (AES) to encrypt their data.
Although not recommended, you are able to use your own encryption and manage your own keys.
Even though all the data is stored on the cloud, it is still appropriate to backup your data by downloading them from Google Drive and storing them in a safe location, these files may require external encryption.