The data protection keyword is one of the most essential things on FriendsBASE, but it is not necessary.
You have to type a keyword BEFORE start typing your data (friends, telephone numbers etc.). Only in that way will be encrypted correctly. Notice that if you forget the keyword there is no way to recover your valuable data.
In order to create a keyword you just type into (1)  a word or a number that contain up to 8 characters.
To ensure that the keyword is ok just click (2).

NOTICE that you have to type your keyword correctly when FriendsBASE asks for it, when it starts, else you cannot even start FriendsBASE.