What is the difference between Tokenization and Encryption?

Let us begin by learning about tokenization.


Tokenization is the phase of restoring sensitive data components (including a bank account number/credit card number) with a non-sensitive substitute, referred to as a token.

Unlike encrypted data, tokenized information is illegible and irreversible because there is no numerical relationship between the token and its original number. No key or algorithm that can be used to change the original information for a token. Rather than, tokenization uses a database, referred to as a token vault, which stores the relationship among the sensitive value and the token. The actual data in the vault is then secured, generally via encryption.


Encryption can scramble the information so that only authorized persons can unscramble the conversation records. Encryption operates by encoding the original data or plaintext with the support of sophisticated algorithms that transform it to unreadable text or ciphertext.

A decryption key would be required to revert to a readable structure. Encryption is best adapted for unstructured fields or databases that are not transformed regularly or saved in multiple systems. It can be used to protect sensitive information including payment card information (PCI), personally identifiable information (PII), financial account numbers, etc.

Types of Encryption

There are two types of Encryption which are as follows −

  • Asymmetric Encryption − There are two numerically related keys, as the public key and private keys, are created to encrypt and decrypt the message. Asymmetric encryption is treated as more secure than symmetric encryption.

  • Symmetric Encryption − Symmetric encryption is also defined as conventional or single key Encryption. It is based on a secret key, which both communicating parties share. The sending party encrypts the plain text to cipher text messages using the secret key. The receiving party on receipt of the cipher text message uses a similar secret key to decrypt it to plain text.


The major differences between Tokenization and Encryption are as follows −

Tokenization is the method of restoring any sensitive information with a surrogate random value known as a token.Encryption is the method of interpreting plaintext into ciphertext using an encryption algorithm and a key.
One of the main use cases is to decrease PCI scope by passing tokens to downstream software.One of the main use cases is to provide the confidentiality of data-at-rest (even if the storage media is negotiated or lost, attackers are not able to view the actual information as they don’t have the keys).
Original sensitive data never leaves the organization.Original sensitive data leaves the organization but in encrypted form.
It provides structured data, including payment cards or social security numbersIt provides structured data, including payment card numbers, and unstructured data including entire files and emails.
Exchanging data is complex because it needs direct access to a token vault mapping token value.Data can be exchanged with a third party or receiver who has the encryption key

Updated on: 17-Nov-2021


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