How to protect yourself from losing data?
Keep your data in DropBox. If you change or lose your phone, you will always have a possibility restore your data from there. Even more! It allow you use Cash on the different android devices.
How to enable password protection?
You could use 'Settings' menu for this aims.
Why Cash require permission to access the Internet?
Cash use them for save and restore data from DropBox.
How to restore the initial application data?
You can remove an all application data from android application manager. And all data will be reset to initial state.