Tokenization is an important concept in data processing and analytics that refers to breaking down a piece of data into smaller parts called tokens. It is a technique used to secure sensitive data and has become especially crucial for data privacy and protection.
Why Tokenize Data
The main reasons to tokenize data include:
Data Security - Tokenization helps protect sensitive information like credit card numbers, social security numbers, names, addresses etc from hackers. The tokens act as reference codes without any meaningful value.
Privacy Compliance - Regulations like PCI DSS require sensitive cardholder information to be protected. Tokenizing data ensures compliance with such regulations.
Data Analytics - Tokenization enables collecting and analyzing data patterns without exposing confidential data. This allows deeper insights from customer data.
How Tokenization Works
The tokenization process works through special software called a “tokenization engine”. Here is an overview:
The sensitive data is sent to the tokenization engine by the application.
The engine creates a random token or reference code to replace the actual data. Tokens look meaningless with no mathematical relation to the real data.
Tokens are stored with associated metadata in a secure token vault. Metadata helps match tokens when needed while keeping data safe.
The system returns tokens instead of real data to the application. So no sensitive data is exposed to end users.
When needed, tokens can be matched to real data by authorized systems via the token vault.
What is Stored and Returned
In summary:
The tokenization engine stores the sensitive information and generated tokens in an encrypted token vault. This vault may be hosted onsite or in the cloud.
The application receives completely useless tokens stripped of any original value or meaning.
Authorized parties may match tokens to their associated sensitive data via the token vault when required.
Benefits of Data Tokenization
Some top advantages of tokenizing data:
Strong data security against external threats and attacks to servers storing data
Compliance with legal requirements and industry regulations around information security
Flexibility to use tokenized data for analytics and other purposes without exposing sensitive information
Scope for safe storage of data in public clouds due to additional security layer
Higher customer confidence and trust in brand and systems due to reinforced data protection
So in short, tokenization enables both strong data security and greater usability at the same time. Protecting data integrity while unlocking its potential value.