Sometime between 2008 and 2009, the number of devices connected to the internet surpassed the number of humans using it. Today, there are close to 4 billion people with access to the internet, while the number of devices connected to the internet is over 8 billion. By 2020 there will be 30 billion devices connected to the internet. Welcome to The Internet of Things, or IoT.
The things on the internet
So, what things are we talking about? Chances are you already have a few of them in your home. Australian homes are now packed with smart speakers, WiFi cameras, thermostats, televisions and light bulbs that can be controlled from our smartphones or by voice. These devices have their own IP address and can communicate with other devices – the smart speaker can control the lights, the WiFi camera can cast to the TV screen – over the internet.
You can already buy a fridge that will send you a photo of its inventory and a doorbell that will alert your phone and stream video allowing you to talk to your visitor while on the other side of the planet. What’s coming next, though, are billions of sensors that will measure temperatures, moisture, movement, traffic, crowds, travel times, speeds, positions, chemical concentrations … almost everything.
These sensors will use little power and have batteries that last for years. They will monitor agriculture, roads, pipelines, sewerage leaks, pollution, bushfires, public transport and our offices and homes. They will be used to help run factories, optimise logistics, manage inventories, avoid traffic jams, schedule timetables and prevent machines from breaking down. To handle all the data they produce, each new 5G phone tower will have the capacity to communicate with up to 250,000 of these devices simultaneously, as well as carry our calls, messages and browsing. Combined with wired access, the internet can now move over 300 terabytes of data per second and capacity is growing at around 30% per year.
Which is just as well, because we took more photos in the past four years than were taken in the previous 175 years combined. We already produce over 2.5 quintillion bytes of data every day and 90% of all the data that exists in the world today – text, photos, measurements, everything – was created in the past two years.
Public versus private
Much of this torrent of data is public, but there will always be a large part that we wish to keep private. Cybersecurity is a concept that barely existed at the turn of the century, whereas today it’s front and centre of the digital age. The biggest concerns aren’t that a hacker could see that you quaffed that chardonnay in your fridge or watch who rings your doorbell. Although, who wants that information out there anyway. More importantly, customer data, financial transactions, health records and even our personal browsing history are things that need to be kept safe.
Hacks are on the rise
This spectacular growth in online data in recent years has, unfortunately, also seen equally strong growth in cybercrime – and it’s not just billionaires with significant offshore holdings who should be concerned with the increase in cybercrime, everyone with any information online should be wary.
While most people are familiar with the ‘big’ hacks, such as the 2014 data breach at Yahoo which resulted in over 3 billion user records falling into the hands of criminals, there are attacks being attempted every day. From cases of disruption to our transport systems through to a case at the end of 2017 when a British couple found that their shopping loyalty reward points had been used by criminals to book a Spanish holiday, cybercriminals are attempting to disrupt and profit from our online information. Governments, private companies and households across the globe are fighting an ever-intensifying battle with cybercriminals to prevent abuse of their online information and disruption to their IT related activities. The ongoing health of the global economy – and its ever-growing interconnectivity via online networks – vitally depends on cybersecurity systems keeping one step ahead of those with malicious intent.
Cybersecurity: a growing investment consideration
Protecting all that data is a big business, and the global demand for cybersecurity services has grown rapidly in recent years and will continue. According to Gartner Research, global spending on cybersecurity has increased at an annual rate of around 8% since 2011, and is forecast to reach $US 96 billion by the end of 2018.
In a world where smart, connected devices already far outnumber humans, we need to ensure our data is under lock and key. So update your software, be careful what you click, make sure you have strong passwords with two-step authentication and back-up all your important stuff. Don’t get hacked.
(The Nasdaq CTA Cybersecurity Index, the index our Cybersecurity ETF aims to track, provides exposure to leading global cybersecurity companies from the US, Britain, Israel, Japan and South Korea including names like Cisco, Symantec, CyberArk and Itron.
Tamas Calderwood is National Manager, Adviser Services at BetaShares, a sponsor of Cuffelinks. This article is for general information and does not consider the circumstances of any individual investor. See BetaShares’ publication, The Case for HACK, for more information.
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