What is Tokenization?

• A. It replaces sensitive data with fake data in the same format
• B. It encrypts data using a public key
• C. It hashes data to a fixed value
• D. It deletes data permanently

Answer: (A)

Tokenization replaces sensitive data with non-sensitive tokens that preserve the original data’s format and structure, so downstream systems can continue processing without handling the real values. The real data is stored securely in a token vault, and only the mapping from token to data is kept there. This is why describing tokenization as replacing sensitive data with fake data in the same format is the best fit.

It’s different from encryption, which transforms data into ciphertext that can be decrypted back to the original value with a key. It’s also different from hashing, which produces a fixed value that cannot be reversed to reveal the original data. Deleting data permanently is not about substituting data with tokens.