Encryption is the process of using an algorithm to transform plaintext information into a non-readable form called ciphertext. In simpler terms, encryption takes readable data and alters it so that it appears random. Encryption helps protect the confidentiality of digital data either stored on computer systems or transmitted through a network such as the Internet. When the intended recipient accesses the message, the information is translated back to its original form, in a process called decryption. To unlock the message, both the sender and the recipient must use a secret encryption key — a collection of algorithms that scramble and unscramble data back to a readable format.
Tokenization is the process of replacing sensitive data elements (such as a bank account number/credit card number) with a non-sensitive substitute, known as a token. The token is a randomized data string which has no essential value or meaning. Unlike encrypted data, tokenized data is undecipherable and irreversible because there is no mathematical relationship between the token and its original number. There is no key or algorithm, that can be used to derive the original data for a token. Instead, tokenization uses a database, called a token vault, which stores the relationship between the sensitive value and the token. The real data in the vault is then secured, often via encryption.