Blockchain technology will continue to disrupt much more than the financial sector.

All over the world, organizations are figuring out how blockchain can help them improve operations, increase efficiency, and provide a new level of security and transparency. According to a recent global Deloitte survey, nearly 70% of overall survey respondents identified data security regulation in the greatest need of modification. And that seems like a good idea, because in 2020 alone, 1,108 data breaches were reported affecting massive global enterprises from Microsoft to Zoom.

There’s no denying the fact that data security is more important than ever. Although Facebook is one of the most powerful tech companies globally, it regularly suffers from high-profile data breaches. If only there was a solution to help security data privacy?

Oh yeah, there is a solution to secure your private data – it’s called tokenization.

Here, we discuss tokenization and how it can be used to disrupt the data security sector.

First thing's first: how does encryption differ from tokenization

If you’ve been exploring the cryptocurrency markets, then you are probably aware of the concept of encryption.

  • Encryption transforms plaintext into ciphertext so that the data is technically altered and rendered “unreadable.”
  • Tokenization is different in that it replaces sensitive data with random data. The sensitive data is then stored elsewhere, and unlike encryption, tokenization is irreversible.

Both encryption and tokenization have strengths and weaknesses when it comes to overall data security.

The challenges of data security

When it comes to organizations in any sector, data security is becoming more and more relevant. The cybersecurity industry is growing massively, partially due to the fact that there are more cyberattacks than ever before. The COVID-19 pandemic contributed to a rise in cybercriminal activity, with many hackers using phishing techniques and ransomware attacks to make money.

There are ever-evolving challenges involved with the data security sector. Organizations must train their employees to be prepared for potential attacks, while also considering privacy laws and regulation issues. In addition, many businesses also have to address insider threats involving malicious or incompetent employees. There is also the issue of allowing access to data for some employees, but not all, to maintain data integrity.

Credit card tokenization is one of the ways that consumers are protected from data breaches since tokens are stored with companies rather than actual credit card data. One criticism of tokenization is the fact that it is often not that scalable. It should be noted that credit card tokenization is much different from crypto tokenization, where real-world assets can be converted into digital tokens.

How blockchain can help to secure data

Tokenization is incredibly crucial to the payment processing industry in general. When you pay for clothes at a retail store, there’s a good chance that credit card tokenization is helping to ensure that your information is private and secure. You may be wondering, what does this have to do with blockchain?

Blockchain allows for data to be stored in a decentralized and transparent manner.

This offers a variety of advantages when it comes to data, such as:

  1. It can ensure data integrity thanks to the immutable nature of the blockchain.
  2. The data is much more secure, since it is extremely difficult to “hack” a blockchain network.
  3. The digital tokenization via the blockchain is scalable while traditional tokenization is not.

Digital tokenization has existed, in some form or another, for decades. Now, the blockchain allows for a different kind of tokenization. Thanks to the blockchain, data can be stored in a trustless and decentralized manner.

Sector-by-sector solutions for improving data security

It’s no secret that blockchain technology is already disrupting finance. However, tokenization on the blockchain has already made it so that investors can purchase tokens that represent real-world assets. For example, someone can purchase a tokenized asset that represents a commodity, such as gold or oil. The tokenized real estate market could soon be worth a trillion dollars.

While there is nothing wrong with encryption technology, many would suggest that tokenizing medical records would be the best possible solution. Thanks to tokenization, electronic health records can be tokenized on the blockchain, which can streamline access.

This is particularly critical for the medical sector, where speed and accuracy can potentially save someone’s life. Encryption would require a more time-consuming process of encrypting, then decrypting, the data.

Will the revolution be tokenized?

The cryptocurrency sector moves very quickly, and it can be difficult to tell what trends will prevail next. However, there is no doubt that blockchain technology will be crucial to shaping the overall future of the cybersecurity industry.

The blockchain has already been used to tokenize real-world assets, and that trend is likely to continue, though the questions remain:

  • How will those tokenized real-world assets be regulated in the future?
  • Will credit card tokenization eventually fade away and be replaced with the blockchain?

The goal is similar, since both deal with the issue of making data simultaneously usable but secure. Blockchain is not a temporary solution for the data security industry: it’s a complete game changer.

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Michael Hearne

Michael Hearne is the CEO of Decentral Publishing and the host of the Uncensored Crypto docuseries.