So I just noticed that while using the Chrome privacy extension "Browsec", a Youtube video would play incredibly slow

Yet, when I turned Browsec off, the video fully buffered in a few seconds.
Is Youtube doing this intentionally to encourage people to stop using IP encryption tools? Or is it something to do with the technology itself?

It’s a shitty free VPN extension, what do you expect? Of course it’s going to be slow, it probably inserts ads, they’re likely going to collect your data, sell it and maybe even sell your bandwidth like Hola.
I recommend you read the /r/VPN sidebar and wiki.

What does IP encryption mean? Also, why are you using google chrome, if you care about your privacy?

Edit: looked it up. It’s a VPN service (closed source at that, lol).

You’re using their network, when you use that extension, meaning, you’re subject to their network speed limits. So if that’s shit, videos are gonna load slower.

What’s a better browser to use for better privacy? Also do you know of any other VPNs that are better?

From the sidebar + Rule 16.
You also want to use these in Firefox.