The Billion-Dollar “Menace”

Cyberthreats are a continuing menace.

These threats only continue to grow. State actors, “hacktivists,” thieves and scammers are seeing the utility in going on the offense in the cyber realm.

The threat is so vast, NATO has officially recognized cyberspace as an “operational domain” needing to be protected, much like land and sea.

But there’s a world of emerging opportunity in this space…

With the number of connected nodes on the internet skyrocketing as the Internet of Things trend grows, more systems are becoming available to compromise.

And since these smart connected devices are a network gateway into our lives via our homes and businesses, they represent a unique threat.

This means that cybersecurity spending is set to grow.

Total spending is estimated to have topped $75 billion last year, but it’s forecast to increase to $101 billion by next year, and more than double in 2020 — to $170 billion.

The number of connected devices is set to grow sharply. It’s estimated that 10 billion devices were connected to the internet last year. This number is forecast to more than triple by 2020 as billions of new Internet of Things devices are added in our homes, offices, factories, farms, hospitals… you name it.

We are already beginning to see the leading edge of the new threat environment emerge, since one of the earliest big attacks recently took place.

Compromised Internet of Things devices are believed to be the means used to take out a large swath of the internet this past October. These devices were taken over by a piece of malicious software called Mirai. Mirai-controlled botnets are suspected to be behind smaller attacks earlier in the year.

How does it work? The malware scans the internet to find Internet of Things devices it can infect in order to grow the botnet, while listening for the order to launch an attack from a remote command-and-control site.

It’s believed cyberactivists launched this attack as a result of rumors that WikiLeaks founder Julian Assange was killed or captured.

As a result, many internet services became unavailable when a large domain name service (DNS) provider Dyn DNS got flooded by this massive attack.

Popular services like Netflix and Spotify got taken out in large areas of the U.S. in the process.

DNS provides a very important service that we all use. It is a large database of internet

domain names designed to provide a simple way to access resources.

When you type “agorafinancial.com” into your web browser, your computer sends a request to a DNS server holding a copy of the database. The DNS server, in turn, provides your computer with an IP address so that it can connect to the site.

That address is what the internet uses to route data back and forth and establish a connection.

If we didn’t have DNS, we would have to memorize hundreds of IP addresses (or maintain them in a file) in order to connect to the internet resources we use every day. With DNS, all we have to remember are easy names, like agorafinancial.com.

The downside, however, is that taking out DNS services means that names can’t be resolved into addresses, and the internet “breaks.”

It’s a point of failure that can be exploited with a distributed denial-of-service attack. Since normal users can’t get a response, they can’t connect to services they request an address to.

This type of attack is no joke. It’s hard to overstate how dependent we’ve come on a steady internet connection with reliable services, especially since so many individuals and enterprises now store their data, or have services hosted, out on the “cloud.”

During an attack taking out an enterprise’s internet, everything grinds to a halt. If it is large enough to be of geographic scope, the U.S. economy essentially stops.

That’s a big problem, but also a big opportunity — with big profits — for cybersecurity firms providing the technology to keep services up and running when the next attack hits. Cyberthreats might be a menace, but cybersecurity is growing into a billion-dollar industry with huge profit potential for investors.

To a bright future,

Ray Blanco
for The Daily Reckoning

The Daily Reckoning