What is Tokenization?

Sensitive data is transformed into anonymous, non-sensitive data through the process of tokenization so that it can be used in a database or internal system without putting it at risk.

The tokens maintain some aspects of the original data—typically length or format—despite having unrelated values, allowing business operations to continue uninterrupted. After that, the original sensitive data is safely stored out of the company’s own networks.

In contrast to encrypted data, tokenized data is unbreakable and irrevocable. It’s important to make this distinction since there is no mathematical relationship between a token and its original number, therefore tokens cannot be changed back into their original forms without the use of extra, independently stored data. Therefore, even if a tokenized environment is infiltrated, the original sensitive data won’t be jeopardized.

What is a Token?

As was already explained, a token is a bit of data that stands in for another, more valued piece of data. Tokens are only useful because they can be used in place of anything valuable, such as a Social Security number or the principal account number (PAN) for a credit card (SSN).

An appropriate comparison is a poker chip. Instead of laying out cash on the table, players substitute chips (cash is easily misplaced or stolen). The chips cannot be used as cash, even if they are taken. It is necessary to swap them first for their representative value.

When your environment is tokenized, the useful data is removed and replaced with these tokens. Most businesses hold at least some sensitive data in their systems, whether it be credit card information, personal health information, Social Security numbers, or anything else that needs security and protection. 

By tokenizing this data, organizations can continue to use it for business purposes without running the risk of breaking compliance rules or having to store sensitive data internally.

What is the Purpose of Tokenization?

Sensitive data is protected through tokenization while retaining its commercial value. This contrasts with encryption, which uses methods to modify and save sensitive data in order to stop it from being used going forward for commercial gain. If tokenization is like a poker chip, encryption is like a lockbox.

It is also possible to decipher encrypted numbers with the right key. Tokens cannot be reversed because there is no significant mathematical relationship between a token and its beginning number.

What is Detokenization?

Detokenization is the reverse process, when the token is used in place of the original data. Detokenization is only possible with the initial tokenization system. There is no alternative method to calculate the original number just from the token.

There are two types of tokens: single-use (low value) for operations like one-time debit card transactions that don’t need to be stored in a database and persistent (high value) for commodities like a repeat customer’s credit card number that must be recorded in a database for recurring transactions.

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