This paper discusses Centralized identity management systems are inherited from legacy systems and thus are exposed to data breaches, identity theft, and privacy invasions. In this paper, a Decentralized Identity and PrivacyPreserving Cybersecurity system is introduced that leverages blockchain, decentralized identifiers, and verifiable credentials to achieve secure and user-controlled authentication. Author uses Zero-Knowledge Proofs, homomorphic encryption, and secure multi-party computation to facilitate privacypreserving identity verification without exposing sensitive information. Experimental findings show improved security, fewer attack surfaces, and low computational overhead. Author discuss scalability, compliance, and adoption issues, describing the promise of decentralized identity in securing future digital environments.