Cut the chicken into 1 to 1.25-inch chunks so the pieces cook evenly.
In a bowl, mix buttermilk, hot sauce, salt, garlic powder, onion powder, smoked paprika, black pepper, and optional sugar, then toss in the chicken.
Let the chicken sit in the marinade for about 5 minutes while you prepare the coating.
In one bowl, combine flour, cornstarch, baking powder, and a small pinch of salt, and place the panko in a second bowl.
Take each piece from the marinade, let the excess drip off, coat it in the flour mix, dip it back quickly into the marinade, then press it into the panko.
Heat 1 to 1.5 inches of oil in a heavy pan to 350 to 365°F.
Fry 6 to 8 nuggets at a time for about 2.5 to 3.5 minutes total, flipping once, until deep golden brown and 165°F internally.
Transfer the nuggets to a wire rack, then season lightly with a pinch of salt and optional paprika or taco seasoning while still hot.
Serve with creamy jalapeño sauce, spicy ranch, chipotle mayo, or a honey-hot dip.