https://firebase.google.com/docs/rules
https://firebase.google.com/docs/rules/rules-language
So Firebase permissions really have more to do with the identity layer than keeping the data secret.
I think that probably everything should be encrypted anyway. This was a largely solved problem even in the 90s, and embedded devices are about as powerful as the 386 and 68030 computers popular then.
We really need a distributed SSL identity layer though. Something like letsencrypt.org except the client's identity would come from the social proof of its peers instead of a central organization. Maybe this is already a solved problem in OpenSSL? I only understand symmetric key encryption, but not the man in the middle protections that SSL certificates provide. To me, p2p identity and encryption should have been a foundational pillar of the internet, not some controversial afterthought like we think of it today.
The usual solution for this is that the data must be signed by a specific private key; possession of that key grants write permission. A generation count or timestamp is embedded in the signed data to ensure that newer data cannot be replaced with obsolete data. Malicious nodes can still block updates from being distributed, though, so you need more than one path to seed the data into the network.