Read time: 5 minutes
Usernames and passwords are business-critical data and a valuable target for attackers. Stolen credentials can provide direct access to sensitive systems, enable lateral movement, or be sold on the dark web for future attacks. Credential abuse plays a role in 39% of breaches across the attack chain, according to the 2026 Verizon Data Breach Investigations Report, down from previous metrics but still a top vector for attack.
So how is it possible that so many millions of usernames and passwords keep getting successfully stolen? Why are these things not secured better?
One huge factor is that many identity and access management solutions and others that store and access usernames and passwords keep that critical data all in one central place. They may keep it encrypted and attempt to secure it in other ways, but the data is still centralized, making it a vulnerable target. Attackers are going to try really hard to break into it, and evidence indicates that they are succeeding.
The key capability of Xage that most of these solutions don’t have, and offers major security and access benefits, is distributed password vaulting. A distributed password vault has several major benefits that make it a must-have for any serious enterprise. The two most urgent benefits are:
- Credentials Are Much Harder To Steal: Credentials stored in a distributed credential store are way more difficult to steal than those in a centralized store. The data is broken up across multiple nodes so that even if a node was compromised, the usernames and passwords could not be derived from it.
- Credentials Are Accessible to Legitimate Users Even If The Network Is Down: Passwords are stored across multiple nodes, and are accessible from their local nodes even without internet connectivity. Remote sites (think of an aircraft carrier in the middle of the ocean) that temporarily lose connectivity to any central network can still access their passwords, and can log into their assets.
What You Will Learn
- Why centralized password vaults are a single, high-value target for attackers
- How distributed password vaulting splits credentials across nodes so no single breach exposes them
- Why remote or disconnected sites can still authenticate even without central connectivity
- How Xage secures distributed vaults using Shamir Secret Sharing and Federated Byzantine Agreement
- Where password vaulting fits alongside PAM, RBAC, MFA, and credential rotation
How Does Distributed Password Vaulting Make Passwords Hard To Steal?
One major reason huge volumes of credentials are routinely stolen and sold on the dark web is that they’re stored in one place inside an enterprise network.
Think of a centralized password store like a bank vault. All the money is there, and everyone knows it. It might be locked up and heavily guarded, but everyone knows where it is. Because of its enormous value, it becomes a target that bank robbers will invest heavily in breaking into.
If a centralized password vault is like a bank vault, a distributed password vault is like tearing every hundred-dollar bill into pieces and storing them in different locations. The owner of the distributed vault has a special machine that can find and reassemble those pieces into usable money. But a cyberattacker would have extreme difficulty discovering all the different locations where these pieces were being held. They’re not as well-known targets as an Active Directory domain controller. After that, the attacker would have to break into each location separately. At each individual location, the data they stole would still be unusable.
Banks have many layers of physical and electronic security to prevent vault break-ins, but it still happens sometimes. But for most companies, a single stolen administrator account could grant a cyberattacker access to hundreds or thousands of other usernames and passwords.
A distributed password vault puts roadblocks in the adversary’s path at numerous stages throughout the attack chain, making it increasingly harder for them to complete an attack.
How Xage Reduces Risk with Distributed Password Vaulting
Xage uses a couple of cryptographic processes called Shamir Secret Sharing and Federated Byzantine Agreement to create a highly secure, highly available distributed password vault that makes it easy to store and manage credentials, but nearly impossible for attackers to compromise them.
As cyberattacks continue to successfully use stolen credentials for initial access and lateral movement, enterprises need something that doesn’t just securely store passwords, but offers a range of other capabilities for managing privileged accounts and protecting sensitive information. Enterprise password vaults have become just one feature in more robust product offerings that include privileged access management (PAM), role based access control (RBAC), multi factor authentication, automatic secure password generation and rotation, and more.
Key Takeaways
- Centralized password vaults are high-value, well-known targets; distributed vaults remove that single point of failure
- Splitting credentials across nodes means data stolen from one location is unusable on its own
- Remote or disconnected sites can still authenticate locally even during a network outage
- Xage secures distributed vaults with Shamir Secret Sharing and Federated Byzantine Agreement
- Stolen credentials remain a top-three initial intrusion method, per Verizon DBIR 2024
- Password vaulting works best alongside PAM, RBAC, MFA, and credential rotation, not as a standalone control
Frequently Asked Questions
What is distributed password vaulting?
Distributed password vaulting splits stored credentials into pieces and distributes them across multiple nodes instead of keeping them in one central vault. Even if a single node is compromised, the data taken from it cannot be used to derive the actual usernames and passwords.
Why is a centralized password vault a security risk?
A centralized vault stores every credential in one place, making it a well-known, high-value target that attackers will invest heavily in breaching. A single stolen administrator account can grant access to hundreds or thousands of other usernames and passwords at once.
Can remote or disconnected sites still access passwords with distributed vaulting?
Yes. Because credentials are stored across multiple nodes, sites that temporarily lose connectivity to a central network, such as a remote facility or a vessel at sea, can still access their passwords locally and log into their assets.
How does Xage secure its distributed password vault?
Xage uses two cryptographic processes, Shamir Secret Sharing and Federated Byzantine Agreement, to create a distributed password vault that is highly secure and highly available, while making it nearly impossible for attackers to compromise the stored credentials.
About the Author
Michael Tsai is the Senior Director of Product Management at Xage Security, where he is building the next-generation privileged access intelligence for the agentic AI era and helping enterprises enforce zero trust access across human, machine, and agentic identities in cloud, AI, and converged IT/OT environments. With more than a decade in identity and cybersecurity, he previously held product leadership roles at Zluri, Iru, and OneLogin, delivering security products that scale for the enterprise. Outside of work, Michael enjoys traveling with his spouse and hanging out with their dog.
