Tokenization is a fairly new concept, unfamiliar to many people, yet also an essential part of modern day life. As a part of data security – which is becoming ever more important in the digital world as technology advances and evolves – tokenization is a critical part of the machine.
As more and more people take an interest in aspects of the digital world, like NFTs and cryptocurrency, they can become confronted with terms and jargon that are unfamiliar. Within this article, tokenization as a whole will be briefly explained and its purposes made clear.
Tokenization is essentially the act of substituting a sensitive piece of data with a non-sensitive equivalent. This equivalent is referred to as a token in this instance, and has no value nor meaning – but is merely used to identify the sensitive data that was substituted in the first place.
The mapping linking the original data to the token employs methods that make tokens impossible to reverse – like creating the tokens from completely random combinations of numbers.
Whilst the tokens themselves are of a completely unrelated value, they often still retain similar elements of the original data, so as to not interfere or slow down any business operations where they may be employed.
It is used to protect sensitive data such as bank accounts,medical records, driver’s licenses and various other types of personal information.
Tokenization has seen a huge rise in recent years as our society moves increasingly to an entirely digital world.
As reported by Business Wire, the Global Tokenization Market is projected to grow from USD 2.3 billion in 2021 to USD 5.6 billion by 2026, at a Compound Annual Growth Rate (CAGR) of 19% during the forecast period.
Although often compared to encryption as a data security method, the two actually differ quite substantially. McAfee reported the difference between the two, saying that whilst they are both effective data obfuscation technologies, they are not interchangeable.
Each technology has its own strengths and weaknesses, and based on these, one or the other should be the preferred method to secure data under different circumstances. In some cases, such as with electronic payment data, both encryption and tokenization are used to secure the end-to-end process.
Tokenization uses less resources than encryption does, and has less chance of failure compared to other data masking methods.
Tokenization carries huge security and risk reduction benefits, and exists as a method for preventing sensitive data falling into the hands of malicious people, websites and applications.
A major benefit includes the difficulty that attackers face when attempting to steal tokenized information. Since the sensitive data is tokenized, even if the data is stolen, it cannot be reverted back to its normal form, so it is useless to hackers and thieves.
Another benefit is its ability to work regardless of systems it is implemented in. Even if a database has been created and in use for years, the data within can be tokenized without the need to reinvent.
This article was written in cooperation with Norion – Tokenization platform.
