What is tokenization?
Tokenization has been a consistent trend since 2018. But lots of people do not really understand what it means and how to describe this process. In the article we are going to explain the meaning of tokenization and how it works.
What does it mean?
Tokenization is the process of replacing sensitive data with identification symbols. In other words, tokenization is the transformation of a physical asset into a digital token on the blockchain system.
Why do people use it? The process helps retain all critical information and does not jeopardize its security. The purpose of tokenization is to reduce the amount of data a company must keep on hand and secure information.
How does tokenization work? Tokens can be made by using mathematical cryptographic functions or hash functions used in blockchain systems. Therefore, tokens hold sensitive data.
What are the benefits of tokenization? It is much more difficult for hackers to find and access data due to tokenization. The process of tokenization has become a popular way for small and midsize companies to improve the security of credit card and e-commerce transactions. For instance, a customer wants to secure information held on its credit cards, then he provides data and points of it will be substituted with a randomly generated token.
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