Vaulted Tokenization vs Vaultless Tokenization

Vaulted Tokenization vs Vaultless Tokenization: Key Points to Consider

Vaulted Tokenization vs Vaultless Tokenization: Key Points to Consider

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In the ever-evolving landscape of data security, the debate between Vault and Vaultless tokenization has gained prominence. Both methods aim to protect sensitive information, but they take distinct approaches, each with different sets of advantages and limitations. In this blog, we will dive into the core differences that organizations consider when choosing an approach and how ALTR makes it easier to leverage the enhanced security of Vault Tokenization while still allowing for the scalability you'd typically find with Vaultless Tokenization. This decision ultimately comes down to performance, scalability, security, compliance, and total cost of ownership.  

Tokenization (both Vaulted and Vaultless), at its core, is the process of replacing sensitive data with unique identifiers or tokens. This ensures that even if a token is intercepted, it holds no intrinsic value to the interceptor without the corresponding key, which is stored in a secure vault or system.   

Vaulted Tokenization

Vaulted (or “Vault”) tokenization relies on a centralized repository, known as a vault, to store the original data. The tokenization process involves generating a unique token for each piece of sensitive information, while securely storing the actual data in the vault. Access to the vault is tightly controlled, ensuring only authorized entities can retrieve or decrypt the original data. For maximum security, the token should have no mathematical relationship to the underlying data; thus, preventing brute force algorithmic hacking, as can be possible when purely relying on encryption. Securing data in a vault helps reduce the surface area of systems that need to remain in regulatory compliance (ex. SOC 2, PCI- DSS, HIPAA, etc.), by ensuring the sensitive data located in the source system is fully replaced with non-sensitive values, thus requiring no compliance controls to maintain security.

The primary technical differentiator between Vaulted and Vaultless Tokenization is the centralization of data storage in a secure vault. This centralized storing method guarantees security and simplifies management and control, but may lead to concerns around scalability, and performance.

Vaulted tokenization shines in scenarios where centralized control and compliance are paramount. Industries with stringent regulatory requirements often find comfort in the centralized security model of vaulted tokenization.

Vaultless Tokenization

Vaultless tokenization, on the other hand, distributes the responsibility of tokenization across various endpoints or systems all within the core source data repository. In this approach, the generation and management of tokens occurs locally, eliminating the need for a centralized vault to store the original data. Each endpoint independently tokenizes and detokenizes data without relying on a central authority. While Vaultless Tokenization has a technically secure approach, this solution relies on tokenizing and detokenizing data from within the same source system. Similarly, this solution is less standardized across the industry and may result in vulnerability to compliance requirements around observability and proving that data stored locally is sufficiently protected.

Technical Differences

The decentralized nature of Vaultless tokenization enhances fault tolerance and reduces the risk of a single point of failure from a compromised vault. However, it introduces the challenge of ensuring consistent tokenization across distributed systems and guaranteeing data security and regulatory compliance.

Striking the Balance

While each approach has its merits, the ideal data security solution lies in striking a balance that combines the security of Vaulted Tokenization with the performance and scalability of Vaultless Tokenization. A hybrid model aims to leverage the strengths of both methods, offering robust protection without sacrificing efficiency, performance, industry norms, or compliance regulations.

ALTR’s Vault Tokenization Solution

ALTR’s Vault tokenization solution is a REST API based approach for interacting with our highly secure and performant Vault. As a pure SaaS offering, utilizing ALTR’s tokenization tool requires zero physical installation, and enables users to begin tokenizing or detokenizing their data in minutes. ALTR’s solution leverages the auto-scaling nature of the cloud, enabling on-demand performance that can immediately scale up or down based on usage.  

ALTR’s Vaulted Tokenization enhances the security and performance of sensitive data by being a SaaS delivered tool and having an advanced relationship with Amazon Web Services. Because of ALTR’s interoperability, many constraints of Vaulted Tokenization have been removed by properly building a scalable vault using cloud resources. ALTR can perform millions of tokenization and detokenization operations per minute per client basis without having the need for a Vaultless type of local implementation.  


In conclusion, the relative differences between Vaulted and Vaultless Tokenization underscore the importance of a nuanced approach to data security. The evolving landscape calls for solutions that marry the robust protection of a vault with the agility and scalability of a cloud-native SaaS model. ALTR’s Vault tokenization solution enables this unique offering by combining cloud-native scalability and ease-of setup / maintenance, with a tightly controlled, compliance optimized vault (PCI Level 1 DSS and SOC 2 type 2 certifications). Striking this balance ensures that organizations can navigate the complexities of modern data handling, safeguarding sensitive information without compromising performance or scalability.

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