Tokenization can be described as the re-placement of sensitive data (e.g. credit card numbers, health records, or personal identifiers with non-sensitive equivalents or tokens). They are used to keep a certain form in which business operations need to take place, yet they do not actually reveal any data since they just keep a form. It will greatly minimize the risk of data breaches, identity theft, and fraud as well as meet the requirements of the strict, international privacy laws including GDPR, CCPA, and PCI DSS.
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