Marks & Spencer. Co-op. Legal Aid. Coinbase. The headlines keep coming, each one representing millions in damages and countless customers whose personal data is now in the hands of cybercriminals. More than 1.7 billion individuals had their personal data compromised in 2024.
The financial impact has been staggering – share prices plummeting, operations grinding to a halt as companies shut down online services for weeks, and recovery costs reaching hundreds of millions. Yet organizations continue to approach data security with the same fundamental assumptions that led to these breaches in the first place.
The Definition of Insanity
Organizations are trapped in a costly cycle: implement security measures, suffer a breach, implement more security measures, repeat. Each incident prompts the same response: strengthen perimeter defences, add monitoring tools, enhance access controls. The security industry has built an ecosystem around point solutions and this reactive approach.
Despite these investments, breaches continue to occur with alarming frequency. The reason is simple: we're treating symptoms rather than addressing the root cause.
Most organizations are confident in their security and privacy infrastructure. They’ve poured resources into firewalls, encryption, monitoring tools, and compliance protocols. But breaches continue to occur. Why? Because these systems still revolve around a central point of failure, sensitive data stored in one place, and access methods that can be used by others. Even modern solutions like passkeys, which can be shared, don’t break this pattern. What’s needed is a model that eliminates both the centralization of personal information and the ability to share and use others' access credentials entirely.
The Compliance-Privacy False Choice
There's a widespread belief that compliance requirements necessitate holding customer data. Organizations assume that meeting KYC, AML, and other regulatory obligations means collecting and storing personal information in centralized databases.
This assumption creates a dangerous trap. To satisfy regulators, businesses accumulate vast repositories of sensitive customer data – names, addresses, birthdates, financial records, government-issued IDs. These databases become irresistible targets for cybercriminals.
When a breach inevitably occurs, all of this carefully collected compliance data becomes compromised. The very information gathered to protect customers and satisfy regulators becomes the source of their vulnerability.
The Inevitable Outcome
Under the current model, data breaches aren't just possible – they're inevitable. When you centralise sensitive personal information, you create a single point of failure that attackers will eventually exploit. It doesn't matter whether you're a global bank, a high-street retailer, or a government agency. The pattern remains consistent.
The impact of these breaches extends far beyond the initial security incident:
For customers, exposed data becomes ammunition for sophisticated phishing campaigns and social engineering attacks. Criminals use stolen personal information to create convincing scams, making customers more vulnerable to future fraud.
For organisations, the consequences are severe and long-lasting. Beyond immediate remediation costs, businesses face reputational damage, regulatory fines, operational disruption, and plummeting share prices. Recovery efforts can consume resources for months or years.
A Different Approach
There is an alternative to this cycle of vulnerability and breach. Instead of asking "How do we better protect this data?" we should be asking "Why do we need to hold this data at all?"
At Nuggets, we've developed a solution that fundamentally changes the relationship between businesses and customer data. Our approach enables organisations to verify identities, process transactions, and meet compliance obligations without storing sensitive personal information.
The concept is straightforward: organisations can verify customer identities and meet compliance obligations through cryptographic proofs without storing the underlying personal data. Instead of collecting and holding sensitive information in databases, businesses receive verifiable attestations that confirm customer eligibility, identity, or compliance status. The verification occurs without exposing or storing the source information, creating auditable compliance records while eliminating data liability.
How It Works in Practice
Our decentralised identity platform integrates seamlessly with existing CIAM infrastructure while eliminating the opportunity for others to misuse SMS and passkeys, thereby transforming how organisations manage sensitive data.
Identity verification and authentication happen through selective disclosure and zero-knowledge proofs, allowing businesses to confirm customer identities without accessing or storing personal information.
Compliance obligations are fully satisfied through our platform. KYC and AML requirements are met, audit proofs are maintained, and regulatory reporting continues as normal – all without holding sensitive customer data. Our approach minimises data collection while ensuring platforms can meet their regulatory obligations.
Crucially, our system maintains complete privacy while providing auditable proofs for investigations. This creates a system that satisfies both privacy and compliance requirements, and existing systems continue to operate normally. The result is a system where breaches become inconsequential.
Beyond Security: The Business Case
Crucially, our system maintains complete privacy while providing auditable proofs for investigations. This creates a system that satisfies both privacy and compliance requirements, and existing systems continue to operate normally. The result is a system where breaches become inconsequential.
Organisations implementing this approach discover benefits that extend far beyond breach prevention:- Customer trust becomes a competitive advantage. Being able to tell customers "we don't hold your data" resonates powerfully in an era of increasing privacy concerns.
- Operational efficiency improves when teams can focus on core business activities rather than managing and securing sensitive customer data.
- Regulatory risk decreases dramatically as privacy laws evolve and multiply across jurisdictions.
- Resource allocation shifts from defensive security spending toward growth-oriented investments.
The Time to Act
The current approach to data security is fundamentally broken. Organisations continue to invest in protecting centralised data stores while hoping they won't be the next headline. This strategy has proven ineffective across industries and geographies.
The breaches will continue under the current model because the model itself is flawed. Centralised storage of sensitive data creates inherent vulnerabilities that no amount of perimeter security can fully address.
Smart businesses are recognising this reality and moving toward decentralized identity solutions. They're not waiting for their turn in the breach headlines – they're changing the game entirely.
Leading the Change
At Nuggets, we're not offering a utopian vision. We're providing a practical, compliance-ready solution that's available today. Our platform has been battle-tested across industries and meets the regulatory requirements that businesses must satisfy.
The shift toward decentralized identity isn't a question of if, but when. Organisations can choose to lead this transformation or follow it. Those who move first will establish competitive advantages in customer trust, operational efficiency, and regulatory compliance.
The next data breach headline is inevitable under the current model. Whether your organisation will be in it depends on the choices you make today.
Ready to explore how decentralized identity can transform your approach to customer data? Contact Nuggetsto schedule a consultation and discover how to break free from the breach cycle.
Nuggets is a Decentralized Self-Sovereign Identity and payment platform that guarantees trusted transactions, verifiable credentials, uncompromised compliance, and the elimination of fraud - across human and machine identities, all with a seamless experience and increased enterprise efficiencies.
We’re building a future where digital identity is private, secure, user-centric, and empowering.
We’d love to hear from you if you're working to build secure, trusted AI systems for your organisation.
You can learn more about our AI Agent Identity solution here or get in touch with us here.