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6 minutes read

Tokenization Vs. Encryption

By Jose Gomez
By Jose Gomez
6 minutes read

The tokenization vs. encryption debate is spirited among data security experts. While these two data protection measures are often mentioned together, there are significant differences between them. Like all other technologies used to protect data, tokenization and encryption have strengths and weaknesses. 

This post will examine tokenization vs. encryption in greater detail. We will review how each technology works to protect data, compare them against one another, and discuss the circumstances one option might be better than the other. Depending on your business, you might have to choose one technology over the other to satisfy regulatory requirements. 

Understanding Tokenization and Encryption

Sometimes tokenization and encryption are erroneously used interchangeably. Tokenization and encryption are both data protection technologies used to secure data, but the similarities between the two ends here. Before comparing tokenization and encryption, you need to understand each in greater detail. 

What Is Tokenization? 

Tokenization is the process of transforming sensitive data, like a credit card number, into a meaningless string of numbers and characters called a token. In a security breach, no sensitive data is put at risk, only the meaningless string of characters that is the token. 

Tokens are generated randomly and stored in a database called a token vault. When the time comes to secure data, a token is randomly selected from the vault and used to replace the original data. Tokens are only used to reference the actual data being protected. Therefore, attackers cannot use a token’s value to guess the value of the original data being protected. 

Tokenization is a HiTech security measure often used to secure personal information such as credit card numbers, account numbers, and social security numbers. Additionally, businesses often use tokenization to reduce their PCI DSS (Payment Card Industry Data Security Standard) obligations. 

What Is Encryption? 

Encryption is a data security process that utilizes an algorithm to transform sensitive data into an unreadable ciphertext. You need an algorithm and a decryption key to make the real data readable again. 

There are two main approaches to data encryption, symmetric and asymmetric key encryption. Symmetric encryption uses the same encryption key to lock and unlock the data. The primary issue with this approach is that if an encryption key is compromised, it can be used to unlock secure data. 

Asymmetric encryption relies on two keys. One key locks the data, this is typically the publicly distributed key, and another key is used to unlock or decrypt the data. In addition, asymmetric key encryption is used to authenticate identities online using SSL certificates. 

Internet merchants also use this encryption approach to encrypt payment card data. In this example, the merchant encrypts the sensitive data using a public key before sending it to the secure payment processing company that uses a separate key to decrypt the data and process the payment. 

Whether symmetric or asymmetric encryption is used, keys need to be rotated to limit the potential damage a compromised key can do. In addition, key rotation limits the amount of sensitive data encrypted using a single key.

Comparing Tokenization Vs. Encryption 

There are strengths and weaknesses to tokenization and encryption. We’re going to compare and contrast some of the significant differences between these two data protection measures so you can decide which method is best for your business’s sensitive data. Key areas we will compare include:

  • Strength
  • Scalability 
  • Data types
  • Compliance 


One of the most critical facets of any security measure is its strength. Tokenization is stronger than encryption. Any encryption’s security strength depends on the algorithm and key used to secure the data. More complex algorithms are more difficult to crack than simple ones, but all encryptions are eventually breakable. 

Many data security professionals would argue that data encryption is not concerned with protection in the traditional sense but rather obfuscation. Data encryption is not trying to prevent attackers from accessing data. Instead, encryption seeks to make finding the real data among the encrypted data as complicated as possible. 

Tokenization doesn’t eliminate all security risks, but it simplifies data security. As long as access to the token vault is not compromised, all sensitive information is secure, even in a breach. 


Scalability is a big concern for modern businesses. Sudden changes in demand can cripple web and mobile applications that are not prepared for a surge in demand. Encryption is more scalable than tokenization. Data encryption is the more efficient option when dealing with large volumes of data. 

Tokenization is challenging to scale. When databases increase in size, security and performance become issues for tokenization. 

Data Types 

The scalability issues tokenization faces are due mainly to the data types it is designed to protect. Tokenization is excellent for safeguarding small snippets of structured data such as credit card numbers, account numbers, email addresses, etc. Encryption is not as strong as tokenization, but it can be used on structured data fields and unstructured data just as effectively

Encryption can be used to secure entire documents and large files. On the other hand, tokenization is only helpful for structured data fields. 


Compliance requirements vary by industry, but many regulatory bodies, including the PCI SSC (Payment Card Industry Security Standards Council), view encrypted data as sensitive data. Even though encryption is a proven data security measure, since it can be reversed or broken, many regulators consider it unsecure

Choosing encryption alone could force your business to take additional security measures to remain compliant in your industry. On the other hand, tokenization can drastically reduce compliance requirements for companies that utilize it. 

How to Choose Between Encryption and Tokenization

Are you struggling to choose between encryption and tokenization? These measures are not mutually exclusive. Many companies use both tokenization and encryption to secure their data. 

Tokenization is best used for securing small bits of structured data like phone numbers, bank account numbers, etc. Encryption is best used to secure messages, unstructured data, large files, communications with third parties, and validate user identity online.

Hopefully, this information helps you understand tokenization and encryption in more detail. If you need help securing your data, reach out to an app development partner. A partner can help you take the appropriate security measures to secure your data and the data of your users. Tokenization vs. encryption is a fun debate, but both security measures are essential online.

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