Which of the following statements regarding tokenization is true?

Tokenization is a security technique that replaces sensitive data, such as personally identifiable information (PII) or payment card information, with a unique identifier called a token. This token holds no meaningful value and cannot be used to retrieve the original data without the appropriate tokenization system.

The assertion that tokenization can reduce the scope of compliance is accurate because by replacing sensitive data with tokens, organizations can limit the exposure of sensitive information in their systems. This in turn allows those organizations to reduce the number of systems that must be compliant with regulations such as PCI DSS (Payment Card Industry Data Security Standard) or GDPR (General Data Protection Regulation). When sensitive data is not stored in systems or is minimized to only what's necessary, the complexity and cost of compliance efforts can be significantly decreased.

Tokenization is a strategic approach for companies looking to improve their data protection mechanisms while also managing compliance requirements efficiently. It demonstrates the potential benefits of separating sensitive data from non-sensitive elements in a business process, allowing organizations to focus their security efforts where they are truly needed.