Tokenization and encryption are commonly used for securing information while it is being stored or transmitted. While both are effective options for meeting internal security standards and mandated regulatory requirements, they shouldn’t be thought of as being interchangeable. A quick glance reveals that both systems come with their own unique benefits, strengths, weaknesses, and features.
Discover the importance of using encryption and tokenization independently and conjointly when protecting data collections of all sizes.
A Glance at Encryption
Encryption is something that most of us encounter every day. The data on our smartphones is often encrypted. Encryption uses algorithms to transform data into a scrambled, unreadable ciphertext. This data can only be restored to its readable form with the use of an encryption key. Encryption is an essential tool for enterprises because it safeguards sensitive data contained within operating systems and on devices. It can be used for large volumes of data and unstructured fields of data. Of course, encryption is absolutely necessary for any enterprise that exchanges sensitive data with third-party clients or agencies. Just how important is encryption? It has been revealed that the customer information that was breached during the recent Equifax hack was not encrypted. In another instance, the Social Security numbers of 20,000 current and former employees of the Internal Revenue Service (IRS) were put at risk when an employee took home a simple thumb drive containing unencrypted data that was later plugged into an unsecured home network.
A Glance at Tokenization
Tokenization is most commonly associated with blockchain technology and enterprises like Bitcoin. However, its usage is far more versatile than most people realize. Tokenization turns a piece of data into, quite literally, a token. This means that an important piece of information can be transformed into a serial number or random group of characters that has no actual meaning or value. Tokenization acts to hide true data under the veil of a meaningless token in the event of a breach. A token that is created is difficult to decipher because of the fact that no key is assigned to it. This means that algorithms and formulas cannot be used to reverse tokenization. The true form of the data is stored in a database that acts as a vault. Tokens are generated by random, which is why tokenization is ideal for use with structured data fields. Identification numbers, account numbers, telephone numbers, and payment information can all benefit from tokenization. Deciding how to implement tokenization isn’t something that’s optional for many enterprises. The Payment Card Industry Security Standards Council has strict guidelines in place for how and when tokenization must be implemented.
Why Layering Security Measures Is Important
While it’s true that encryption and tokenization are two separate things, they can often be used together to create an extremely secure system for financial fraud prevention and detection within an enterprise. For instance, a database that stores the true form of data that has been tokenized is often encrypted. This is an example of how the two methods of concealment can be used together to create multiple layers of protection against hackers and breaches.
Encryption and tokenization are increasingly being used together as we move into the era of cloud storage. A system that incorporates both can be capable of securing different types of data within a single environment.