The Tokenization Process and its Pros and Cons
Tokenization is one of the best ways to prevent cyber incidents as an eCommerce and protect all your customers’ data while processing payments, sign-up processes, and more. It basically is a way to send useless or non-valuable information across servers rather than the clients’ actual data.
This personal information is, instead, stored online in secured servers that are nearly impossible to hack. This is the reason why tokenization is an important part of every eCommerce business and it should be part of a fraud protection system within a company.
There is more to know about the entire operation of converting data into tokens and we’ll go through every corner of it in this full guide.
This is your ultimate guide to tokenization, what it’s used for, by whom, the pros and cons, and everything else you should know.
What is Tokenization?
Protection of data has never been more challenging. With the introduction and nowadays necessary use of the internet, people can store almost everything they own on their devices. For instance, sensitive information like financial transactions, personal chats, or even your crypto domain.
To protect your data while browsing the web, downloading files, or using third-party software, you have the possibility to use tokenization. These replace your data with random numbers so that it isn’t prone to cyber-attacks or hacks and your data remains safe at all times.
In the case of cyber-attacks, the hacker will not have his hands on your data but rather on useless tokens that mean nothing.
Pros and Cons of Tokenization
The ability of digital tokens to be used instead of personal data is one reason they’re so popular. This allows users more flexibility when accessing services and makes it easier than ever before for people to remain secure online. Let’s go through the main advantages of using tokenization within an organization.
First and foremost, due to the safer process during financial transactions, customers are happier and are more inclined to choose your company in the future. This will of course benefit you in terms of later revenue.
Secondly, it makes your business regulation easier. In fact, as an eCommerce accepting credit cards, you have to comply with the PCI DSS (Payment Card Industry Data Security Standard). And complying with these rules becomes much easier when adopting a tokenization process in the system. The PCI DSS can issue fines going up to $500,000 and considering tokens is a great way to avoid future problems.
Apart from that, from the technical side of the process, tokenization makes the data secured from both endpoints and eventually be easier to integrate into existing technology.
On the other hand, tokenization might not be the best option for very big organizations since the data to encrypt could be too much and it may not work with homemade internal systems.
All things considered, tokenization is a great resource for all online businesses and it can benefit all your teams in the long run.
The Tokenization Process in Detail
Tokenization is a process that helps protect sensitive data by creating tokens with unique values and replacing the original information with a useless one. This way, we can keep it from being exposed or modified without knowing what was originally there in order, to begin with.
To give you an idea, a customer inserts his credit card when making a payment online. This data is then stored in the gateway to then send it to the server and return it to the user once the payment is done.
This is where tokenization takes place and keeps the original data to the internal server while sending through tokens externally. The seller can therefore make the transaction keeping the credit card information from the customer to himself rather than sharing it during the process.
But what exactly are these tokens? They protect the data from leaking but several ones exist on the market, let’s dive more into this.
Token Types
As mentioned previously, we can find several types of tokens on the market and the most common ones include:
- Non-cryptographic and cryptographic tokens,
- Irreversible and reversible tokens,
- Single-use or multiple-use tokens,
- Payment transaction tokens,
- Asset and security tokens.
Naturally, with numerous data leaking episodes happening every year, the tokenization process of data has become increasingly popular.
How to Tokenize a Domain?
You can tokenize your domain through Cloudname, which is the leading platform to sell, buy, and rent securely online using tokens. Cloudname offers a variety of services that can be tailored to suit your needs. One such service is domain management, where you are able to manage the domains for your customers to remain safe during their financial transactions.
You can register on the website and submit your information to get started and start making your online business more beneficial.
Why Should You Tokenize Your Domain?
We have previously explained that the tokenization process is simply the fact of converting data or assets into tokens. One of the advantages of carrying out this process is that it facilitates the transfer of ownership of assets.
Domains are very profitable nowadays and they represent one of the best investment ways since pretty much anyone can take part in the space – for example with a crypto domain.
Many individuals bought and resold domains online making hundreds of thousands of dollars in profit.
Furthermore, it’s worth noting that the assets acquired in the purchase of the domain will be assigned to all owners based on divided ownership. In plain words, when a tokenized domain is bought, it isn’t paid to a single owner but to all the shareholders and the income is distributed based on the percentage that each one invested.
To sum up, you will not only secure your online business for you and your customers but you will also be able to make a lot of money in profit.