First off, I’m not sure what these “encrypted” databases really are. The manual says
Encrypted Databases: If you have databases containing sensitive or private information, you can create an encrypted database. This is specialized AES-256 encrypted disk image that will not appear in the Finder or your desktop when it’s open.
But @BLUEFROG stated that a password protected database is not encrypted:
Regardless: I’d still rather use some hardware protection than a password, if I had to. Passwords can be brute-forced or guessed.