What is the Security of Everything (SoE)?

“The Internet Of Things Generates Trillions In Revenue By Connecting Billions Of Devices.”

These aren’t my words — they belong to Forbes contributor John Edwards, who has recently pointed out a few insane figures involving the rapidly emerging Internet of Things (IoT) market…

These figures include Cisco’s projection of 50 billion connected devices by 2020, as well as an expected $14.4 trillion in global IoT revenue by 2022.

Already, we’ve seen companies like Google-owned Nest creating connected thermostats and major car manufacturers like Ford, BMW, and General Motors developing cars that can talk to each other.

Yet in spite of all this optimism and technological progress, many people are ignoring a particularly alarming fact about the Internet of Things…

As more and more objects become connected, it’s no longer just our computers at risk of cyber security threats, but the physical objects we use every day as well.

As Jeff Greene, co-chair of NSTAC, puts it, “We have created a whole a new playground for attackers to dream up things to do.”

Or as the Association of Europe Threat Assessment explains, “It is equally inevitable that many of these devices will leave vulnerabilities via which access to networks can be gained by criminals.”

Other experts like Jerry Irvine of the National Cyber Security Partnership are calling it…

“Scary As Hell”

Naturally this is a huge threat to the entire Internet of Things.

The Pentagon sees it as a major risk as well…

Its high-tech think tank DARPA believes Internet-connected cars, medical devices, and appliances could give criminals and foreign militias an opportunity to attack homeland America.

But as bad as these risks may sound, it’s actually good news for cyber security companies getting a head start on the rapidly advancing and disruptive trend.

You see, the Internet of Things has a ball and chain attached to its leg: It’s never going to get up to speed until we’re comfortable that the huge security risks have been addressed.

That’s why the Security of Everything (SoE) is pushing investors to the front of the queue to profit sooner from this connectivity boom.

The Household Hacker

Today’s cyber attacks cost the global economy $445 billion every year. That’s bigger than the entire GDP of Austria, Denmark, and even Israel.

But what happens when, instead of just every cash register in a store having an Internet connection, every piece of merchandise gets one, too?

Well, in short, the risks become far greater.

We’re opening billions (quite literally) of new opportunities to hackers who are working every day to find and exploit holes. And the reality is most sensors we’re currently attaching to previously “lifeless” objects are too basic. In other words, they’re built to receive, interpret, and communicate — not protect.

For instance:

Google’s own exploration into the Internet of Things — Nest, the thermostat maker — has already been victim to intruders.

A group of researchers from the University of Central Florida were able to hack in within just 15 seconds. They changed the digital display to read, “Hello Dave,” the famous words of Hal in 2001: A Space Odyssey.

And while the humor may have been light, the underlying tone was clear: If we can hack into just one of your devices in less than 15 seconds, then we can now access your private information as well.

And the thermostat isn’t just an “odd one out,” either. Connected devices have proved to be hackable elsewhere.

Take Foscam’s wireless baby monitors, for example. As one nanny was tending to a one-year-old girl, a voice came out of the baby monitor…

“That’s a really poopy diaper,” it said. (Pretty funny, I know, but this is a true story…)

At first, the nanny thought it was a joke, but then she realized someone had actually hacked into the network. They were watching the baby. They were speaking to the room. And they even had the ability to stream it live on the Internet.

The cameras were quickly patched, but at the time, it was estimated that there were over 40,000 other vulnerable cameras.

The reality is that in the time it’s taken you to read this, there have been tens of thousands of cyber attacks against U.S. targets.

And it’s no surprise why…

A study by HP found that 70% of Internet of Things devices have serious security vulnerabilities. In fact, the same study found that the average Internet of Things device has 25 of them — each!

That’s 25 ways a hacker could exploit each device — 25 ways a hacker could break in and potentially control an entire network.

Multiply that by Cisco’s estimate of 50 billion devices expected to be connected by 2020, and that’s a huge opportunity for criminals and state militias: 1.25 trillion threats.

And that’s a conservative number, as the folks at Morgan Stanley estimate 75 billion devices will be connected by 2020.

It’s clear a new security model is desperately needed and that right now, we’re at several tipping points for the Security of Everything:

1.) The Government has gone “all in.”

In February, the president called a Cyber Security Summit and invited the likes of Apple CEO Tim Cook to attend.

Representatives from major tech companies like Facebook, Google, and Microsoft all attended, too.

Just days before, the government moved to create a new agency to fight cyber attacks around the world — called the Cyber Threat Intelligence Integration Centre.

On top of this, a recent executive order urges companies to share cyber security threat information with each other and the federal government.

Remember: The government controls more spending than any company on the planet. So any time it starts spending in a market, we’re talking windfall profit opportunities.

Gains are going to be propelled not only by market need but also by the United States government.

It’s happened before with technologies like renewable energy, and it’s poised to happen again with cyber security. And even if you don’t agree with Uncle Sam getting involved, that doesn’t mean you should ignore the profit opportunities that come with it.

2.) America saw the most sophisticated cyber attacks ever in 2014.

In the recent Sony hacks, private emails, information about executive salaries, unreleased films, and even confidential personal data were all breached.

The attack cost Sony $15 million, but the more hard-hitting losses were the personal data of employees and their families, as up to 47,000 records were stolen.

The same year, JP Morgan was also a target.

Hackers gained information on 76 million households across the United States — that’s two out of every three houses in America.

On top of this, we’ve also seen…

• EBay: Hacked for 145 million records of its customers’ personal information.
• Target: Hacked for 70 million credit card numbers towards the end of the previous year.
• Home Depot: Hacked for 56 million credit and debit cards.
• Apple iCloud: Hacked for passwords, usernames, data, and photos of many well-known celebrities.
• Anthem: Hacked for 80 million records, including Social Security numbers and addresses.
• Countless other data breaches.

These attacks have prompted FBI Director James Comey to say, “There are two kinds of big companies in the United States. There are those who’ve been hacked, and those who don’t know they’ve been hacked.”

This is putting the attention of companies — large and small — onto cyber security. These companies are finally starting to realize the true cost of not protecting their customers’ personal data.

3.) The Internet of Things itself.

We’re currently on the verge of a true consumer shift — one that is going to completely change the everyday life of the average person.

Let me give you one scenario…

Picture a working man whose route to work usually takes one hour by car. Early one morning, an accident occurred on his usual route…

Without the man having to do anything, his own devices have changed his route. And to make sure he gets into work on time, his alarm clock sets itself 15 minutes earlier.

When the alarm goes off, the man will walk into his kitchen to find his coffee waiting for him. Five minutes before he leaves, his car will turn on and begin to clear the ice covering the windshield.

Now, that might sound like something out of Star Trek, but it’s no more futuristic than the World Wide Web was in the ’90s.

And now it’s time for the second stage… only this time, you can expect it to be adopted much quicker than the seven years it took for the Web to be.

That’s why the Security of Everything is one of the greatest opportunities to profit sooner from this connectivity boom. It’s the reason cyber security is one of the savviest ways to front-run the profits everybody is waiting to collect from the Internet of Things.

Until next time,

Jason Stutman

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