What is the essential difference between pseudonymization and anonymization?

Question

Accepted Answer

Pseudonymization is reversible (and stays personal data); anonymization is irreversible (and leaves GDPR scope).

* Reversibility is the dividing line: pseudonymization stays personal data, anonymization leaves GDPR scope. *

Pseudonymization
Anonymization

What
Replace identifiers with pseudonyms
Strip/generalize/suppress until no one is identifiable

Techniques
Hashing, encryption, tokenization
Generalization, suppression, aggregation

Key property
REVERSIBLE — restore identity with the key
IRREVERSIBLE — re-identification computationally infeasible

GDPR status
Still personal data
Outside GDPR scope (when done correctly)

The dividing line is reversibility. Pseudonymization keeps a path back to the person (intentionally), so it's a security safeguard, not an exit from the regulation. Anonymization aims to burn the bridge entirely.
Tip: Reversible → still regulated. Irreversible → free. The whole legal difference hinges on that one word.
Go deeper:

Pseudonymization (Wikipedia) — reversible, stays personal data.
 Data anonymization (Wikipedia) — irreversible, leaves GDPR scope when done correctly.

	Pseudonymization	Anonymization
What	Replace identifiers with pseudonyms	Strip/generalize/suppress until no one is identifiable
Techniques	Hashing, encryption, tokenization	Generalization, suppression, aggregation
Key property	REVERSIBLE — restore identity with the key	IRREVERSIBLE — re-identification computationally infeasible
GDPR status	Still personal data	Outside GDPR scope (when done correctly)