Tokenization vs Encryption: Difference and Comparison

In the era of computing and technology, the security of the system has become a major part of our lives. Many scams are happening online, and they are known as cybercrimes.

To avoid them or to lower the chances of risk, the techniques used are tokenization and encryption. The two of them are used together, but they have differences. 

Key Takeaways

  1. Tokenization replaces sensitive data with non-sensitive tokens, while encryption transforms data into an unreadable format using an algorithm and a key.
  2. Tokenization does not require complex key management, as it uses a token vault to store the original data, while encryption relies on secure key management practices.
  3. Tokenization is ideal for payment processing and protecting credit card information, while encryption can be applied to a wider range of data types and applications.

Tokenization vs Encryption

The difference between tokenization and encryption is that they both are different in the ways they work. Tokenization is a technique in which the data is transformed into enclosed data randomly into tokens that are stored in a database, whereas in encryption, the data is converted into unreadable text by the use of mathematical algorithms and keys. 

Tokenization vs Encryption

Tokenization is a way of keeping the data safe by converting plain text into unreadable random values that can be accessed with the help of tokens stored in a database.

Structured data like cards and online payments are easy to maintain with the help of this. 

Encryption is another method of converting the data in such a way that it is not accessible to the naked eye.

This method involves the data being converted and secured by the use of mathematics as well as structured algorithms. The main advantage of using this is it can handle large data from a database. 

Comparison Table

Parameters of ComparisonTokenizationEncryption
DefinitionTokenization is the process of converting data into unreadable data by the use of random tokens that are stored in the database Encryption is a way of converting the data by the use of mathematical algorithms and coding to make it inaccessible to a normal human. 
Handling sizeTokenization can only handle small data because the ma implementation is very difficultEncryption can handle large databases because it has set rules that have to be followed
Usage Tokenization is used in structured data like cards, online payments that are easy and hassle-free. Encryption can be used for both types, that is, structured data fields as well as an unstructured complete file. 
AdvantageThe original data in tokenization is never lost that is useful in some cases as well as the format can be maintained without the worries of securityEncryption is ideal when the data has to be decoded since the key is only required by third parties. 
DisadvantageThe process in tokenization of decoding is quite slow because it can only be done when the token is available. The original data is sent in the form of encryption and leaves the organization and format-preserving is difficult. 

What is Tokenization? 

The world has grown over the internet, and the need to protect people’s and companies’ information and data is growing daily.

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Tokenization is a method to convert the data from a database to random encryption.

The encryption has a token attached that is stored in a database, and for accessing the information, the third party should have the tokens. 

The tokens are used in a more arranged data structure that is easier to access since it takes a long time for a large amount of data because the tokens are made slowly.

This is used for payment gateways, storing card details on the internet, etc. In this process, the data is sent to a company, which decrypts and performs the necessary actions. 

The advantage of using this type of encoding is that they retrieve the information that is stored and sent to the third party as a token, access it and also make sure that the format is maintained and secured since cracking it is not easy due to not having a set algorithm. 

The tokenisation technique is quite popular and gained more popularity due to the extra security it gives people for storing data.

The process is slow and is not preferred by big companies, but for storing sensitive information, it is used. 

What is Encryption? 

Due to the process of tokenization being slow, the developers had to go for something fast and had a similarity in all the data stored by a company, and that led to the development of the encryption technique.

Encryption is the process of converting the data into encoded texts that can only be accessed by using a key provided to a third party.

The process of encryption includes converting the data by the use of mathematics and algorithms designed especially for this process.

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The algorithms include specific information on how the system will treat each piece of value. 

The advantage of using this process is that they are fast since it is a designed algorithm that helps in the whole process.

Along with this, it can also be used with data structures that are not arranged or unstructured, so they are used at various companies.

Sometimes the data is to be only accessed by a third party, and the original users don’t need the information after that. 

The disadvantage of using encryption is that they are not helpful when we want to retrieve the data as the original party since it is already in the hands of a third party.

There are sets of rules that sometimes make it easy for cheaters to access this and cause malfunctions. The format has to be changed periodically because of the factor of predictability. 

encryption

Main Differences Between Tokenization and Encryption

  1. Tokenization is the process of converting data into unreadable text by the use of random tokens that are stored in the database, whereas encryption is a way of converting the data by the use of mathematical algorithms and coding to make it inaccessible to a normal human. 
  2. Tokenization can only handle small data because manual implementation is very difficult, whereas encryption can handle large databases. After all, it has set rules that have to be followed. 
  3. Tokenization is used in structured data like cards and online payments that are easy and hassle-free. In comparison, encryption can be used for both types, that is, structured data fields and unstructured complete files. 
  4. The original data in tokenization is never lost, which is useful in some cases as well as the format can be maintained without the worries of security, whereas the advantage of encryption is ideal when the data has to be decoded since the third parties only require the key. 
  5. The process of tokenization of decoding is quite slow because it can only be done when the token is available, whereas in encryption, the original data is sent in the form of encryption and leaves the organization and format-preserving is difficult. 
References
  1. https://www.sciencedirect.com/science/article/pii/S1363412711000161

Last Updated : 11 June, 2023

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8 thoughts on “Tokenization vs Encryption: Difference and Comparison”

  1. The explanation of tokenization and encryption is clear and concise. Tokenization replaces sensitive data with non-sensitive tokens, while encryption transforms data into an unreadable format using an algorithm and a key. The emphasis on the specific application and advantages of each technique is important for those involved in maintaining system security.

    Reply
  2. The article effectively delves into the details of tokenization and encryption, providing a comprehensive understanding of the nuances between these security techniques. The clear and concise nature of the explanation is beneficial in emphasizing the significance of both methods in securing sensitive data and systems from potential cyber threats.

    Reply
  3. The in-depth explanation of tokenization and encryption provides valuable insights into their respective advantages and disadvantages. Understanding the differences between these techniques is crucial for implementing robust security measures, particularly in the context of the prevalence of cybercrimes and online scams.

    Reply
  4. The comparison table provided in the article is a commendable way to illustrate the differences between tokenization and encryption. Both techniques have their own sets of advantages and disadvantages, and understanding these clearly is necessary for comprehensive system security.

    Reply
  5. Tokenization and encryption are essential techniques in securing systems against cybercrimes. Tokenization replaces sensitive data with non-sensitive tokens, while encryption transforms data into an unreadable format using an algorithm and a key. The differences between the two techniques and their specific applications are important to understand for effective system security.

    Reply
  6. The detailed explanations of tokenization and encryption are informative and provide a comprehensive understanding of their significance in the realm of system security. Tokenization is ideal for payment processing and protecting credit card information, while encryption can be applied to a wider range of data types and applications, making them valuable tools for safeguarding sensitive information.

    Reply
  7. The article presents a comprehensive overview of tokenization and encryption, highlighting their specific characteristics and applications. The emphasis on the advantages and disadvantages of each technique serves as an informative guide for those involved in maintaining and enhancing system security. The comments from industry experts elucidate the importance of understanding the nuances between tokenization and encryption.

    Reply
  8. The use of tokenization and encryption as security measures is emblematic of the increasing need to prioritize data protection. Handling size and usage are vital to the intention and effectiveness of these techniques. The clear explanation of the differences and use cases between tokenization and encryption is crucial knowledge for those involved in system security.

    Reply

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