Shred is effective at protecting your identity because it is permanent. While this means you can never get your data back, it also means a hacker or malicious intruder also cannot get your data back. For files, shred utilizes a very secure United States Department of Defense wiping standard known as DOD 5220.22-M. For other locations, shred removes the information from your computer's hard drive or memory using other, appropriate methods.
This is the United States Department of Defense Directive 5220.22-M, which provides baseline standards for the protection of classified information. It uses multiple levels of deletion so that the file you delete may not be recovered, even by undelete programs. You can read more on the Defense Technical Information Center website: http://www.dtic.mil/whs/directives/corres/html/522022m.htm