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Tokenization can be one of the most powerful ways to improve your data security, especially when dealing with sensitive data such as credit card numbers or personally identifiable information (PII). 

To fully understand how tokenization can help keep your data secure, it’s important to understand what tokenization is and how it works. Then you can take advantage of five effective tokenization strategies that will help you make the most of this valuable data security tool.

So, what is Encryption? Encryption is a way to secure data from cyber attacks. It turns data into code that isn’t readable by anyone who doesn’t have access to a secret key. According to Micro Focus, “data encryption is a computing process that encodes plaintext/cleartext (unencrypted, human-readable data) into ciphertext (encrypted data) that is accessible only by authorized users with the right cryptographic key.”

What is Tokenization?

In essence, tokenization is a security process that involves replacing sensitive data elements with non-sensitive substitutes known as tokens. Tokenization aims to protect sensitive information from theft or unauthorized access. There are two ways to do this: creating a separate database for storing tokens or adding an extra layer of protection to existing databases.

Tokenization is quickly becoming popular among companies. However, many people don’t understand how tokenization works or why it’s so important to use. Here are five ways tokenization can improve data security:

Security Protection from Breaches

Tokenization is an alternative to encryption that can significantly reduce security risks. Why? Because tokenization is a way of obfuscating sensitive data, it is virtually impossible for malicious hackers to gain access to sensitive information if they can breach your network. On the other hand, encryption protects your data by scrambling it with specific algorithms and keys. But if those are compromised, then all of your data becomes vulnerable.

Patient Security for Healthcare

Health data breaches threaten people’s privacy, health, and well-being. In recent years, we saw the theft of over 17 million private records from healthcare providers. Tokens can mask personally identifiable information (PII) with randomized values—e.g., tokens can store PII in a database without risking privacy breaches or unauthorized use of sensitive data.

Secure Payments

A tokenized system keeps sensitive payment data secure and hidden by substituting random characters for numbers or other bits of identifying information. Sensitive personal information is not stored anywhere on your network and can never fall into a hacker’s hands. Each time a customer makes a purchase, unique, encrypted tokens replace their credit card information to create more secure transactions with you.

Meeting Compliance Standards

Whether you’re a new startup or an established company, part of your responsibilities as a manager is to make sure your company meets compliance standards. This can mean any number of things, from formal training on harassment policies to encrypting all corporate emails. It’s up to you to keep yourself informed about what regulations apply to your organization and what steps you can take (and not take) to ensure compliance.

Increased Customer Trust

Many customers are concerned about their data being stolen from a company’s databases and used for fraudulent purposes. However, some companies now offer tokenization, which encrypts all of your customer’s sensitive information. One needs a token or special code to decode the encrypted data. This makes it tokenized. Your customers are more likely to trust you when they know that their information isn’t in anyone else’s hands.

While tokenization is an important part of securing data, it is not necessarily a standalone solution. To ensure you are fully protected, it’s important to implement encryption, obfuscation, and masking as well.

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