Encoding, encryption, and tokenization are three distinct processes that handle data in different ways for various purposes, including data transmission, security, and compliance. In system design, it's important to choose the right approach to handle sensitive information.

🔹 Encoding Encoding converts data into a different format using a reversible scheme. For example, Base64 encoding changes binary data into ASCII characters, allowing it to be processed by text-based systems.

Encoding is not meant to secure data. Encoded data can be easily decoded using the same scheme without a key.

🔹 Encryption Encryption transforms data into a secure format using algorithms and keys. Symmetric encryption uses the same key for both encryption and decryption, while asymmetric encryption uses a public key for encryption and a private key for decryption.

Encryption protects data confidentiality by converting readable data (plaintext) into an unreadable format (ciphertext). Only those with the correct key can decrypt and access the original data.

🔹 Tokenization Tokenization replaces sensitive data with non-sensitive placeholders called tokens. The mapping between the original data and the token is securely stored in a token vault. Tokens can be used across various systems without revealing the original data, reducing the risk of data breaches.

Tokenization is often used to protect credit card information, personal identification numbers, and other sensitive data. It's secure because tokens do not contain any part of the original data and cannot be reverse-engineered. Tokenization is particularly useful for compliance with regulations like PCI DSS.