The encryption code is open source as it is in the javascript so you can evaluate it. It's also available in the chrome plug-in, and there's now the app in the android play store:
https://play.google.com/store/apps/details?id=com.privatesh.... so the private.sh web server or related anonymyzing proxy don't have access to your query since it is encrypted. on the gigablast servers will know your query, but they won't know your IP address.