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Data Masking vs Tokenization: Navigating Data Protection Techniques

In the realm of data security, protecting sensitive information is paramount for businesses and institutions. Two primary methods used for this purpose are data masking and tokenization. Data masking obscures specific data within a database so that the data users see does not correspond to the actual values, yet the functional format remains. This technique is often utilized to protect personal, sensitive, or confidential information when non-production environments need it for testing or analysis purposes. It allows the use of realistic data sets while safeguarding the real data.

On the other hand, tokenization replaces sensitive elements with non-sensitive equivalents, termed tokens, that have no exploitable meaning or value. The tokens are used in the data environment without revealing the actual data, yet the format is preserved. This method is essential for executing transactions or working with data in environments that require the original data format for operational integrity. Both tokenization and data masking are crucial processes to ensure that sensitive information remains secure, yet they serve different purposes and functionality within an organization’s data security strategy.

Key Takeaways

  • Data masking distorts the actual content to secure sensitive data for non-productive use.
  • Tokenization replaces sensitive data with non-valuable tokens maintaining format integrity.
  • Both techniques are essential to protect information while complying with varied data security needs.

Understanding Data Masking

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Data masking serves as a critical function in protecting sensitive data from unauthorized access while maintaining its utility for analytics and testing. This section aims to demystify the concept and examine the various methods employed to shield confidential information.

What Is Data Masking

Data masking, also referred to as data obfuscation, involves concealing original data with modified content (characters or other data). Static Data Masking (SDM) and Dynamic Data Masking (DDM) are two principal techniques to perform this task. SDM is applied to a replica of the data and becomes a permanent alteration, thereby creating a sanitized version that is safe for use in less secure environments. In contrast, DDM obscures data in real-time, ensuring that sensitive information never leaves the production environment and is only masked when accessed by unauthorized users.

Types of Data Masking

There are numerous data masking techniques employed based on the data’s nature and the desired outcome:

  1. Entity-based Data Masking: This method focuses on specific data entities, replacing sensitive data with realistic but not real data.
  2. Structured and Unstructured Data Masking:
    • For structured data, which exists in fixed fields within a record or file, techniques such as encryption, character shuffling, and substitution are common.
    • Unstructured data, such as emails and documents, may require more complex methods due to their varied formats, often involving redaction or data scrambling.

Implementing these techniques helps in mitigating risk while using data for analytics or software development purposes, maintaining the balance between data utility and privacy.

Understanding Tokenization

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Tokenization plays a pivotal role in safeguarding sensitive data by replacing it with unique identification symbols that retain all the essential information about the data without compromising its security.

What Is Tokenization

Tokenization is a data protection process in which a sensitive data element, such as a credit card number, is substituted with a non-sensitive equivalent, known as a token, that has no exploitable meaning or value. This token maps back to the sensitive data through a tokenization system, but unlike encrypted data, tokens cannot be mathematically reversed.

How Tokenization Works

At the heart of tokenization is the token vault, a centralized repository where the relationship between the sensitive data and the generated tokens is stored. When a token is created, the sensitive data is sent to a tokenization system which then generates a random string of characters in the place of the original data. This token is then used within the system’s internal processes or transmitted to external systems. Notably, even if the token is intercepted, without access to the centralized token vault, the original data remains secure.

Use Cases for Tokenization

Tokenization finds its utility in several areas:

  • Payment Processing: Merchants utilize tokenization to secure credit card numbers during transactions, rendering the data useless to hackers.
  • Data Tokenization: This is broader than just payment information and can be applied to any sensitive data such as healthcare records, financial information, and personal identification details.
  • Data tokenization ensures compliance with various regulations and standards that mandate the protection of personal and sensitive data.

Comparing Data Masking and Tokenization


In the landscape of data security, understanding the nuances between data masking and tokenization is critical for organizations dealing with Personal Identifiable Information (PII) and adhering to various privacy regulations.

Differences in Definitions

Data masking involves concealing original data with modified content, such as characters or other data. It is used to protect sensitive information while allowing the non-sensitive equivalent to be utilized for training or software testing. On the other hand, tokenization replaces sensitive data with non-sensitive placeholders known as tokens. These tokens can be used in databases or systems without revealing the actual data but can be mapped back to the original data when necessary.

Differences in Applications

The application of these data protection methods varies. Data masking is typically applied when there is no need to reverse the masking since the process is often irreversible. Tokenization, conversely, is essential in environments where the original data needs to be retrieved for operations such as payment processing, which comes under the purview of standards such as PCI DSS.

Differences in Methods

Methods of implementing these techniques also differ. Data masking can be static or dynamic, affecting the data at rest or in transit. Tokenization often involves using a secure tokenization server which creates a map between the token and the original data, restricting access to only those with genuine need.

Differences in Compliance

Both methods help organizations meet compliance requirements but in different ways. Data masking is a recommended practice under GDPR for protecting data during testing and development. Tokenization is recognized by HIPAA and CCPA as a means to de-identify PII ensuring that compliance with data privacy laws is maintained even if the data is intercepted or accessed by unauthorized individuals.

Importance of Data Security Practices

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Data security practices such as data masking and tokenization are essential to safeguard sensitive information and ensure regulatory compliance. They play a crucial role in mitigating risks associated with data breaches.

Protecting Sensitive Data

Entities hold various types of sensitive data, including Personally Identifiable Information (PII) and Protected Health Information (PHI), which carry substantial value and risks if compromised. Data security measures like encryption and tokenization ensure that even if unauthorized access occurs, the actual data remains unintelligible and secure. Particularly, tokenization replaces sensitive data with non-sensitive equivalents, known as tokens, which are useless to potential thieves.

Compliance and Regulations

Adhering to compliance and regulations such as GDPR, HIPAA, CCPA, and PCI-DSS is not just about avoiding penalties; it’s about maintaining trust and integrity in one’s operations. These regulations stipulate that companies must implement adequate data protection measures. For example, GDPR enforces strict rules on data privacy and handling of EU citizens’ information, necessitating the adoption of robust security practices.

Mitigating Data Breach Risks

The risk of data breaches is an omnipresent threat to organizations. Proactive data breach prevention through data masking and tokenization significantly reduces the potential impact of a breach. By rendering the actual data useless to attackers, these practices are a strong deterrent, protecting not only the privacy of individuals but also the reputation and financial well-being of the organization.

Implementation in Different Sectors

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The application of data masking and tokenization varies widely across different sectors, each with distinct regulatory and security concerns. Organizations prioritize protecting sensitive information such as Personal Health Information (PHI), Personally Identifiable Information (PII), and financial data, tailored to the unique circumstances of their industry.


In healthcare, protecting PHI is paramount. Healthcare organizations frequently apply data masking or tokenization strategies to ensure data privacy. For example, within healthcare databases, PHI like patient names and treatment details can be tokenized, replacing sensitive data with unique identification symbols that retain all the essential information minus the privacy risks. The use of tokenization in a healthcare context can prevent unauthorized access to sensitive patient data while allowing healthcare professionals to perform analytics and research.

Financial Sector

The financial sector relies heavily on tokenization for securing PII and transaction data. In particular, payment processing systems utilize tokenization to safeguard credit card numbers during transactions, substituting sensitive data with a token that is meaningless outside of the secure transaction environment. This use of tokenization helps financial institutions comply with regulations like PCI DSS while reducing the risk of data breaches involving sensitive customer information.


E-commerce platforms harness both data masking and tokenization to protect customer data across customer service databases and transactional systems. Tokenization plays a critical role in the e-commerce sector for securing online payment processes, as it enables merchants to handle customer payment details without storing sensitive information, mitigating the risk of data theft. Data masking practices are employed to obscure customer data within internal systems, thus bolstering data privacy and enhancing customer trust in digital commerce platforms.

Technical Aspects of Masking and Tokenization

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This section examines the technical intricacies of data masking and tokenization, including their algorithms, how they handle data at rest and in motion, and the implications on scalability and performance.

Algorithms and Methods

Data masking and tokenization utilize different strategies to secure sensitive data. Data masking, sometimes referred to as data obfuscation, involves concealing original data with modified content (e.g., characters or other data). Common methods include substitution, shuffling, and number variance. Tokenization replaces sensitive elements with non-sensitive equivalents called tokens, which have no exploitable meaning or value. Tokenization methods can often be linked to entity-based data masking technology, which identifies specific data types for tokenization.

  • Data Masking
    • Substitution
    • Shuffling
    • Number Variance
  • Tokenization
    • Entity-based

Data States: At Rest and In Motion

Data security must be ensured whether data is at rest (stored data) or in motion (data being transmitted). Data masking is frequently employed to secure data at rest, rendering it useless to unauthorized entities attempting to access it. Tokenization is more versatile, offering protection for both data at rest and data in motion, by replacing sensitive elements before they are stored or transmitted.

  • Data at Rest: Masked permanently
  • Data in Motion: Protected by tokenization

Scalability and Performance Impact

Concerning scalability and performance, data masking can be less demanding on resources as it is generally a one-time process. On the other hand, tokenization systems can be more complex, as they may require secure token vaults and robust infrastructure to maintain the token mapping, potentially having a significant performance impact on larger datasets. However, modern solutions such as format-preserving encryption have emerged to balance security with performance demands, enabling scalable approaches for protecting large volumes of data without drastically impacting system response times.

  • Data Masking
    • Typically less resource-intensive
  • Tokenization
    • Can impact performance on large scales
    • Solutions like format-preserving encryption balance needs

Data Privacy and Compliance Requirements

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In the digital age, data privacy and compliance have become cornerstones for businesses handling sensitive information. The intricacies of legal frameworks such as GDPR, HIPAA, CCPA, and PCI-DSS necessitate rigorous data protection methods to avoid penalties and maintain customer trust.

Understanding the Legal Landscape

Data compliance refers to the requirement that organizations adhere to privacy laws regulating the way they collect, store, and manage personal information. GDPR, short for General Data Protection Regulation, imposes strict rules on data processing for entities operating within the EU, emphasizing the importance of data masking in safeguarding personal data. Similarly, the HIPAA, applicable within the United States, mandates the protection of healthcare information, impacting how healthcare providers approach data anonymization through techniques like tokenization.

Financial institutions often fall under the guidelines of PCI-DSS, which stipulates protective measures for credit card information, including tokenization and data masking strategies. Various states in the U.S. have also enacted privacy laws like the CCPA, the California Consumer Privacy Act, that grant consumers extensive rights regarding their personal data and how it is processed.

Best Practices for Compliance

To ensure compliance, organizations often turn to established data obfuscation techniques. Tokenization replaces sensitive elements with non-sensitive equivalents, a strategy that helps in meeting PCI-DSS requirements for protecting cardholder data. The role of data masking, on the other hand, is to hide personal information by replacing it with fictional but realistic data, contributing to GDPR compliance by minimizing the risk of data breaches.

Regular compliance reviews are essential for continuous adherence to privacy regulations. Companies must be proactive in keeping up with legislative changes, assessing risks, and implementing the most effective data security methods tailored to their specific needs. By following these compliance guidelines, businesses protect not only their customers’ privacy but also their own reputation and integrity in the marketplace.

Challenges and Considerations

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When implementing data security techniques such as data masking and tokenization, organizations must carefully weigh the challenges and considerations. These measures are crucial for protecting sensitive information such as personally identifiable information (PII), but they must be balanced against the potential risks of data re-identification and the threat of insider data exfiltration, all while maintaining the utility of the data for legitimate business needs.

Risk of Re-Identification

The risk of re-identification emerges when anonymized data is cross-referenced with other data sources, potentially revealing individuals’ identities. Data masking must be sufficiently robust to prevent such occurrences, especially when dealing with PII. The strength of tokenization lies in its ability to replace sensitive data with non-sensitive equivalents, but care must be taken to ensure that the anonymization process doesn’t leave patterns or clues that could facilitate re-identification.

Dealing with Insider Threats

Insider threats pose a significant challenge in data privacy and security. Individuals with access to the system might abuse their privileges, leading to data exfiltration. Tokenization helps mitigate this risk by ensuring that even if data is accessed improperly, it remains unintelligible and useless without the proper tokenization system or keys. Data masking also contributes to security by transforming the data such that it retains its structure and utility for certain applications, but prevents unauthorized users from viewing the true data.

Data Utility vs. Privacy Trade-Offs

The balance between data utility and privacy is a delicate trade-off. While anonymization techniques strive to maintain the utility of data for analysis and decision-making, they must not compromise the underlying data privacy requirements. It is critical to strike a balance where data is sufficiently de-identified to protect against privacy breaches while remaining valuable for business intelligence and operational needs. This trade-off requires constant evaluation to align with evolving data protection regulations and organizational policies.

Future Trends and Developments

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In the realm of data security, future trends and developments point towards more sophisticated data anonymization techniques, increased cloud adoption with a focus on data security, and innovations aimed at meeting stringent compliance requirements. These progressions are set to enhance data protection mechanisms across various industries.

Advancements in Data Anonymization

They are witnessing a rise in the deployment of advanced data anonymization tools, moving past traditional methods to embrace machine learning algorithms that can identify and protect sensitive information more effectively. Institutions are now gravitating towards dynamic anonymization, allowing real-time data utilization without compromising privacy.

Cloud Adoption and Data Security

The shift towards the cloud has made cloud adoption critical for businesses, necessitating robust security measures to protect sensitive data. Data masking tools are being developed to work seamlessly with cloud services, enabling businesses to securely manage data operations on cloud platforms while ensuring data integrity and compliance with regulations like GDPR.

Innovations in Compliance Technologies

With compliance standards evolving, there is significant momentum in creating more intuitive data tokenization tools. These tools not only offer enhanced security by substituting sensitive data with non-sensitive equivalents but also ensure that businesses keep pace with legal requirements. Innovations in this space are particularly focused on automating compliance to simplify adherence while mitigating risk.

Best Practices in Data Masking and Tokenization

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Effective data security hinges on implementing reliable data masking and tokenization strategies. These practices protect sensitive information from unauthorized access and potential data breaches.

Establishing Robust Data Security Policies

Data security starts with comprehensive policies. Entities must define clear procedures for data masking, ensuring sensitive attributes are obscured to prevent misuse. Tokenization should also be included, replacing sensitive elements with non-sensitive equivalents. This allows data to remain useful without exposing underlying values. The policies must be enforceable, with regular audits to guarantee compliance.

  • Key procedures:
    • Define sensitive data categories
    • Specify appropriate masking techniques
    • Establish tokenization protocols
    • Conduct frequent policy reviews

Ensuring Data Protection in Third-Party Interactions

When sharing data with third parties, data protection must not be compromised. Contracts should mandate data anonymization before exchange, limiting exposure of sensitive information. Data masking and tokenization agreements ensure third parties handle data responsibly. Rigorous monitoring and enforcement are necessary to verify third-party compliance, mitigating risks associated with external data processing.

  • Checklist for third-party data handling:
    • Enforce anonymization and tokenization in agreements
    • Monitor third-party compliance regularly
    • Review and renew data handling clauses as needed

Maintaining Business Continuity

A resilient business continuity plan anticipates potential data disruptions. Data masking and tokenization should help maintain operations without sacrificing data security. Regular testing of restoration procedures, with a focus on secure access to masked and tokenized data, is essential. This ensures that, even in the event of a breach, business functions can proceed with minimal impact, while keeping sensitive data secure.

  • Restoration procedure elements:
    • Regular backup of tokenized and masked data
    • Secure and rapid data restoration methods
    • Emergency access protocols for crucial personnel

Applications and Use Cases

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Data masking and tokenization are critical techniques employed to protect sensitive data while it is in use within different environments. These methodologies ensure that data remains safe whether it is shared externally or utilized internally, especially in development and testing phases.

Data Sharing and External Collaboration

In data sharing and external collaboration, data masking is an effective way to protect sensitive data. Masking techniques, such as pseudo-anonymization, allow for secure data sharing by obscuring specific data elements. This means, individuals can collaborate without revealing actual sensitive details. For example, original customer names in a dataset might be replaced with fictional names, ensuring privacy while maintaining the usability of the data. Tokenization finds a similar application in e-commerce environments where it preserves the privacy of payment information, as exemplified by tokenization as a service.

Application in Testing and Development

Within testing and development environments, both techniques ensure developers and testers can work with realistic data without exposing sensitive information. Tokenization is particularly useful in development environments by replacing sensitive elements with non-sensitive equivalents called tokens, which have no external value or meaning. For instance, a developer can work with tokenized credit card numbers that retain the format of the original data but have no real-world value, reducing risk in the event of a data breach.

Data masking, on the other hand, is commonly applied when creating test data. Dynamic data masking techniques can create a sanitized version of the database on-the-fly, which means that testers receive data that looks and feels like production data but is actually stripped of sensitive information. For software testing, this is essential as it permits rigorous testing without compromising security, as described in the research on data masking guidelines for GDPR compliance.

Tools and Technologies

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In the realm of data protection, tools and technologies play a crucial role. They enable organizations to achieve compliance and maintain the confidentiality of sensitive information. The two primary methodologies employed are data masking and tokenization, each supported by specialized tools designed for specific security tasks.

Data Masking Tools Explained

Data masking tools are designed to shield sensitive data from unauthorized access. They work by obfuscating the original data with realistic but artificial information. This ensures data privacy while permitting usability in non-production environments. IBM InfoSphere Optim and Informatica Dynamic Data Masking are prominent examples of data masking tools. They offer features like dynamic data masking, which allows the on-the-fly masking of data, and static masking for permanent data obfuscation. Compliance with regulations like GDPR is often a built-in feature of these tools, enhancing their appeal for enterprises concerned with regulatory adherence.

Features of Data Tokenization Tools

Data tokenization tools, on the other hand, replace sensitive data with non-sensitive equivalents, known as tokens, that have no exploitable value. These tools, such as Protegrity Tokenization and TokenEx, provide robust security by ensuring that sensitive data elements are not present in the system after the tokenization process. Essential features include the ability to tokenize data across various environments and platforms, as well as compatibility with different data formats. They also support data minimization principles, which is a key aspect of regulatory compliance frameworks. Data tokenization tools help in minimizing the risks of data breaches by limiting the exposure of sensitive data.

Technical and Operational Security Measures

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In the realm of data security, it is imperial to distinguish between the various methods employed to protect sensitive information. The techniques of data obfuscation, data sanitization, and redaction stand as critical components in the fortress of data protection, each serving a unique role in the overarching strategy to shield data from unauthorized access.

Data Obfuscation

Data obfuscation involves the use of methods like scrambling and substitution to make data unintelligible or less clear to unauthorized viewers. This includes creating fake data or values to prevent real data exploitation. Obfuscation techniques do not traditionally prevent data use but alter the data’s appearance, acting as a deterrent against direct data comprehension.


  • Scrambling: Rearrange the order of characters in a string
  • Substitution: Replace sensitive information with harmless placeholders.

Data Sanitization

Data sanitization pertains to the irreversible removal or destruction of data to prevent its reconstruction and retrieval. Shuffling data or using cryptographic encryption are methods to ensure that once data has outlived its purpose, it cannot be reconstructed by unauthorized parties.


  • Deletion: Permanently erasing files or records.
  • Destruction: Physically destroying storage devices.

Redaction Techniques

Redaction, a more focused form of masking, entails the meticulous concealment of specific parts of text or data. This is where sensitive elements are hidden, and only non-sensitive parts of the data are left accessible, often used in legal documents or sensitive financial information handlings.


  • Black Bar: Classic method where sensitive text is covered with black bars.
  • Pixelation: Obscuring specific information areas with pixels to make them unreadable.

By integrating these technical and operational security measures, organizations can significantly bolster their data protection frameworks, ensuring that sensitive information is handled with the highest security standards.

Training and Awareness

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In the realm of data protection, equipping IT and security teams with the right training is crucial for safeguarding sensitive data and ensuring compliance with data security regulations. Raising employee awareness of data security practices helps mitigate insider threats and reduce the potential for data breaches.

Training for IT and Security Teams

IT and security teams must be proficient in the technical aspects of data masking and tokenization techniques. Specific training sessions should cover the operational procedures for data obfuscation, which includes the correct application of tokenization methods that turn sensitive data into non-sensitive equivalents. This is essential for protecting personally identifiable information (PII) and other classified information within an organization’s infrastructure.

  • Hands-On Workshops: Employees should practice with real-world scenarios to understand better how to apply masking techniques and prevent unauthorized access to sensitive information.
  • Compliance Training: They need to stay informed about the latest data compliance laws to prevent legal ramifications from improper data handling practices.

Increasing Employee Awareness

Creating a culture of security within an organization means increasing employee awareness of data security. All employees should be aware of their role in maintaining the integrity of sensitive information and the protocols to follow in the case of detecting a possible data breach.

  • Regular Seminars: Regularly scheduled informative sessions help in keeping the staff up-to-date on the importance of safeguarding data.
  • Best Practices: Employees should be made aware of best practices regarding data security, including safe handling and reporting procedures for potential insider threats.

By focusing on comprehensive training and awareness programs, organizations can enhance their overall data security posture and better protect against data breaches.

Organizational Impact

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Organizations continuously manage the trade-off between protecting sensitive data and maintaining operational effectiveness. The adoption of data obfuscation techniques, such as data masking and tokenization, significantly shapes their strategic outcomes.

Improving Productivity

The implementation of tokenization can potentially enhance productivity by allowing safe access to data for development and testing purposes. When sensitive data is replaced with unique identification symbols that retain essential information without compromising security, it simplifies the process for developers. They are able to work with realistic data sets, improving software quality and reducing the time to market for new features and products.

Ensuring Data Privacy and Trust

Both data masking and tokenization serve as robust strategies to uphold data privacy. By transforming sensitive information into a format that is meaningless to unauthorized users, organizations fortify their defenses against data breaches and data exfiltration. The use of a data masking guideline offers a methodological approach to ensuring that personal data is protected in line with regulations such as the GDPR, therefore fostering trust among customers and stakeholders.

Assessing Cost Implications

While adopting data obfuscation practices can represent upfront investment, they can also lead to cost savings in the long term by mitigating the financial repercussions of data breaches. Costs related to remediating a data leak, legal consequences, and the loss of customer trust can be substantial. Thus, the cost implications of tokenization and data masking are both a consideration and an incentive for organizations to invest in robust data security measures.

Frequently Asked Questions

In the realm of data security, understanding the specific use cases and benefits of data masking and tokenization is crucial for safeguarding sensitive information.

How does tokenization differ from encryption in protecting sensitive data?

Tokenization replaces sensitive data with non-sensitive substitutes, called tokens, which have no exploitable value. Encryption, on the other hand, transforms data into a ciphertext using an algorithm and can only be reversed with the correct key.

What are the main advantages of using data tokenization over data masking?

Data tokenization offers enhanced security by creating a unique token that does not bear any mathematical relation to the original data. This makes it particularly robust against data breaches compared to basic data masking, which may simply obscure data with reversible alterations.

In what scenarios is dynamic data masking preferred over tokenization?

Dynamic data masking is often preferred in scenarios that require real-time data obfuscation without altering the original dataset, such as during user access to live databases wherein data exposure must be minimal based on user permissions.

Can tokenization be used to achieve data minimization in compliance with privacy regulations?

Yes, tokenization aids in data minimization by reducing the footprint of sensitive data within an organization’s systems, aligning with privacy regulations such as GDPR and CCPA that require minimal retention of personally identifiable information.

How are redaction and tokenization techniques distinct in their approach to data protection?

While tokenization allows for the data to be reverted back to its original form when necessary, redaction is a form of data masking that permanently removes sensitive information from documents, ensuring that the data can no longer be reconstructed or accessed.

What are the implications of tokenizing provided text for handling both masking and unseen words in data security?

Tokenizing provided text can create unique representations that mask sensitive information and additionally handle unseen words by assigning them tokens, thus maintaining data integrity and confidentiality across varying datasets and inputs.



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