Tokenization Vs Encryption: What’s The Difference? 2023

Tokenization Vs Encryption: What’s The Difference? In the digital age, data is the new gold. A certain amount of data is collected and stored in today’s organizations of all sizes and types. There is no doubt that this data must be safeguarded regardless of the device or technology utilized. Here, data security comes into play.

Throughout its life cycle, data security refers to a set of policies and practices meant to secure this digital information against unauthorized access, manipulation, or theft A strong data security strategy protects an organization’s assets against cybercriminal activities, insider threats, and human mistakes when properly planned and executed.

Through encryption or tokenization, these technologies protect sensitive information by concealing its contents. A deeper look at these words will help us better understand data security. If you also aim to become a Blockchain professional there are several brilliant courses on blockchain technology that can give you an idea about the entire world of crypto and blockchain.

Tokenization Vs Encryption: What’s The Difference?

Encryption: What Is It?

In data encryption, an algorithm is used to convert plain text information into ciphertext, which is unreadable. With the use of a cryptographic key, we’ve created this ciphertext. One would need a decryption method and a decryption key to decrypt this incomprehensible material back to plain text.

Generally Speaking, There Are Two Main Techniques To Encryption:

Encryption using symmetric keys. The information is encrypted and decrypted using a single key in symmetric key encryption. This approach is similar to using a key to lock and open a house’s door. The major downside of this encryption is that if the key is compromised, it may be used to decrypt all of the data it was intended to protect.

Asymmetric Key Encryption (or Public-Key Encryption). This technique encrypts and decrypts using two distinct keys. Multiple parties can communicate encrypted data without having to share the same encryption key. Thanks to the development of asymmetric key encryption. Due to the fact that it just locks the data and never unlocks, this public key may also be freely distributed to anybody who wants it!

Encryption’s Uses

Uncovering sensitive information via encryption has become a regular practice. Businesses all across the world use encryption to protect several sorts of sensitive information:

• Cardholder data (CHD)
• Payment card information (PCI)
• Personal data
• Personally identifiable information (PII)
• Nonpublic personal information (NPI)

Data such as financial account numbers and other sorts of information

Commonly, SSL encryption (Secure Sockets Layer) is used to protect information sent over the Internet.

On their PCs and mobile phones, millions of users encrypt their data with operating system encryption tools or third-party encryption tools. In the event that a computer or phone is stolen, this encryption helps prevent the loss of important data.

In addition to preventing government monitoring, encryption may also prevent the theft of critical company data.

Tokenization – What Is It?

In the Payment Card Industry Data Security Standard (PCI DSS), the word “tokenization” is used (PCI DSS). Unmeaningful data is converted into random characters called tokens. Tokens have no real meaning and are simply used to replace genuine data. If a data breach occurs, you cannot use it to guess the original data. As a result of the lack of a cryptographic mechanism to convert sensitive information into ciphertext, tokenization is not as secure as encryption.

To recover the original data, no algorithm or key may be reversed. It’s actually a database that records the link between a token and its sensitive value that’s used in the process. The second degree of protection can be added by encrypting the genuine data in the vault.

Also, the design of a token is taken into account in order to make it more useful and user-friendly. Example: When you receive a phone notification about an online transaction, the last four numbers can be stored in the token. As a result, the tokenized number would appear as “*******1234”.

As a result, the actual bank account number or credit card number used for payment may be seen. This is because the merchant does not have access to the actual card number.

Tokenization’s Applications

Tokenization is most commonly used to safeguard payment card data. Payment Card Industry Security Standards Council helps retailers reduce their responsibilities (PCI DSS).

In order to authorize a card payment, the token must be sent to the vault, where an index is utilized to get the token’s true value. For the end-user, the browser or application performs this action almost instantly.

Tokenization Vs. Encryption

Despite the fact that encryption and tokenization differ in a number of ways, their major distinction is the security approach that each employs When it comes to data protection, tokenization utilizes a token, while encryption uses a key.

As A Result Of These Differences:

A huge volume of data can be encrypted or decrypted with ease since encryption relies on keys. Tokenization, on the other hand, makes it harder to scale up securely while maintaining performance metrics as the database grows in size.

Both organized and unstructured data can be encrypted (such as entire files). Vote-based data fields cannot be tokenized (such as payment cards or Social Security numbers).

However, although encryption facilitates the sharing of data with third parties (who have the encryption key), tokenization makes it more difficult to share data since it needs direct access to a data vault that maps token values.

Encrypting data has a number of downsides, including the inability to organize and search. new encryption techniques were created to secure information without compromising end-user functionality. However, the encryption strength of such methods is reduced as a result of such techniques. When you use tokenization, you may keep the format without losing any security.

If you encrypt your data, the original data leaves the company, but in an unreadable form. Instead of the original data ever leaving an organization, tokenization ensures compliance by ensuring that the data never leaves the company.

Wrapping Up

The answer is both. Nevertheless, both methods have their advantages and disadvantages.

Cloud data security technologies such as encryption and tokenization will be increasingly utilized to protect cloud data as more businesses migrate their information to the cloud. Each of these security methods is effective in its own manner, and each has its own advantages and disadvantages.

As long as the digital world is kept safe, both companies and end-users benefit. If you want to learn more about this, enroll in the best Blockchain courses and learn blockchain. It will not only help you understand the basics but also put you a step ahead in the workforce. Hope you enjoy our article Tokenization vs Encryption.