Encrypting all sensitive data ensures that the information remains unreadable and protected in the event of interception or unauthorized access. Even if a third party were to gain access to the data, without the encryption key, the data would remain confidential. Using strong passwords is a good practice but does not protect data at rest or in transit. Hashing is irreversible and typically used for verifying data integrity rather than confidentiality. Storing in a secure location is a good practice but doesn't provide protection during data transfer.