Ironically, encryption is not an important part of bitcoin (?) The above statement is taken out of a book which I've been reading: Mastering Bitcoin 2nd Edition.


  ...as its communications and transaction data are not encrypted and do
  not need to be encrypted to protect the funds...


Just started about bitcoin, going through the third chapter and when I come across the above lines, I merely struck by one question, and that is, if the communication happens between (peers' / wallet to bitcoin network) is not encrypted...then I am just thinking a scenario

X is sending BTC to Z (obviously by mentioning Z's address in txn)

Y (bad guy) cuts in the communication which is not encrypted (as per the above reading) and tampers the transaction that X has been sent ( by Just putting his address in beneficiary )

I mean, honestly, it is a very naive scenario that anyone could think of and I know there would be something in bitcoin (which I am not aware of) could prevent this from happening, so, giving clarification on how this kind of attacks being handled or mitigated in Bitcoin would be much helpful for this post.
Cryptography and Encryption

In the wider world, cryptography is used for a variety of security related purposes:


Authentication (proof of identity, or proof of ownership)
Non-repudiation (author cannot later deny authorship of data)
Confidentiality (secrecy - third parties can't see the data)
Integrity (proof that data has not been changed or tampered with)


When we say "encryption" without clarifying further, we are usually talking about the use of cryptography to ensure confidentiality (secrecy of data, but not secrecy of a transmission having occurred - the latter might involve steganography or private channels etc).

Bitcoin's peer-to-peer protocol doesn't need secrecy but it does need a form of authentication and integrity proof that is provided by digital-signatures. 

Traditionally digital-signature algorithms used RSA which involves encrypting a hash of data but not encrypting the data itself. Bitcoin uses Elliptic Curve cryptography which produces digital signatures without involving encryption of a hash.

So the author is perhaps pointing out that the data sent by Bitcoin peer-to-peer protocols is not encrypted for confidentiality and does not involve encryption.

Terminology

The word crypto-graphy literally means hidden writing. There is a certain irony in using this term for elliptic curve cryptography which cannot directly be used for hiding the text of messages - what many people mean by encryption is the process of converting normal readable plaintext into unreadable ciphertext.