Evin McMullen, CEO and co-founder of Billions, discusses the implications of data breaches in the AI era.
By Evin McMullen|Edited by Cheyenne Ligonnow4 min readMake preferred on ShareShare this articleCopy linkX (Twitter)LinkedInFacebookEmailMake preferred onOn September 7, a significant hack of a blockchain responsible for transferring bitcoin between exchanges resulted in a loss of approximately $320 million. This incident captured widespread attention due to its scale, but interestingly, it involves funds that could potentially be returned. The transactions are recorded on a public ledger, making them traceable, and the hacker appears to be a white-hat who is currently in discussions to return the stolen funds.
In stark contrast, the more concerning breaches are those that expose personal data, which are often overlooked despite their lasting impact. During the same period as the $320 million hack, Trezor revealed that the personal information of around 67,000 customers had been compromised through a shipping vendor. Additionally, another breach exposed about 200,000 records, including government identification numbers alongside verified wallet addresses. Data stolen from a hardware wallet manufacturer in 2020 continues to resurface as physical mail demanding bitcoin, highlighting the long-term consequences of identity leaks. Unlike a stolen key, personal identifiers such as home addresses and passport numbers cannot be easily changed or secured.
Evin McMullen is co-founder and CEO of Billions Network, which focuses on creating privacy-preserving digital identities for individuals and AI agents.
This aspect of security is often neglected in discussions. The interconnected technology sector collects vast amounts of identity data. Cryptocurrency exchanges verify user identities, hardware wallet manufacturers gather physical shipping addresses, and various on-ramps retain essential documents. Each of these entities becomes a centralized repository of sensitive data, creating a tempting target for hackers. While the stolen $320 million can potentially be recovered, the damage from leaked identities is enduring; once your personal information is linked to a public wallet address, that connection remains permanently visible.
The current debate often centers around whether platforms are secure enough, if they implemented patches swiftly, or if users managed their keys correctly. However, this presumes that data collection is necessary when it is not. Verifying an individual’s credentials does not require retaining their identity. Vendors can confirm a customer's legitimacy without storing sensitive documents. By adopting a principle of minimum disclosure, verification can occur without the need to hoard personal data. Without such data, there is nothing to leak or sell.
We have seen this scenario unfold before. When regulators mandated consent for data collection, the market responded with cookie banners, which users often dismiss without reading. Similarly, the cryptocurrency sector has developed its version: requiring users to upload their IDs to multiple platforms. This approach leads to a passport copy being stored across many databases, failing to protect anyone while enriching those who breach the weakest systems.
This is merely the beginning. The internet is transitioning to a model where software will act on our behalf, and the distinction between "bot" and "human" is fading. A new category of verified agents is emerging that will handle transactions on behalf of real individuals. These agents will require authorization to transact at unprecedented speeds and volumes. If they inherit the current model that necessitates sharing complete identities across services, we will not just have a few databases at risk; we will create billions of them, continuously vulnerable.
While the $320 million may eventually be returned, the personal identifiers that were leaked cannot be restored. The key takeaway from recent events is not that we need to fortify our data storage but rather that we are hoarding data that we do not need to collect in the first place. The technology to enable verification without surrendering identity already exists—proven, private, and portable—for individuals today and their digital agents in the future. The pressing question is whether we will adopt these solutions before the current model of data accumulation becomes entrenched.
Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.
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