Pseudonymization

Pseudonymization is a data deidentification technique that involves replacing personal identifiers with pseudonyms while maintaining the connection to the original personal data. Pseudonymized data cannot be linked to a person’s identity on its own; however, it can be re-identified using a separate secure storage of personal data.

With pseudonymization, data remains functional and useful, striking a good balance between data utility and privacy. In this regard, pseudonymization offers higher data utility than anonymization, which is a more privacy-focused deidentification technique.

In technical terms, pseudonymization can be implemented using tokenization.

Imagine you have a bag of marbles, each with a name written on it. To keep the marble owners’ names secret, you replace them with code names.

This way, Alice becomes RedQueen21, and only you know the real identity behind RedQueen21. That’s pseudonymization!

Why would you need to pseudonymize data? First, because it’s a simple and effective way to protect your customers’ personal data, aligning with privacy regulations like the General Data Protection Regulation (GDPR).

Specifically, GDPR defines pseudonymization as follows:

‘Pseudonymisation’ means the processing of personal data in such a manner that the personal data can no longer be attributed to a specific data subject without the use of additional information, provided that such additional information is kept separately and is subject to technical and organisational measures to ensure that the personal data are not attributed to an identified or identifiable natural person.

However, it’s more than a GDPR recommendation; it’s a smart approach to maintaining privacy in a data-driven world.

Pseudonymization is crucial in scenarios where identity recognition is needed without compromising privacy, such as in banking. Compared to anonymization, pseudonymization enables better data utility while keeping risks acceptable:

Think of pseudonymization as a privacy cloak. You change names in your files to secret codes. If someone unauthorized views the data, they can’t discern the real identities. But you can, because you have a secure list that maps the pseudonyms to real people.

For more details on the relationship between pseudonymization and tokenization, see Pseudonymization vs Tokenization Explained.