By MoneyMorning.com.au
Long ago, before the tech boom and bust, Mr Smith started to build a house. It was 1999 and the electrical industry was all abuzz about future smart homes.
Being a young man, keen to prepare his new home for the future, he decided to build a ‘smart home‘. So as he wired it, he loaded the house with additional CAT 5 cabling on top of the copper cabling.
Every room in the house would have the latest and greatest data cabling to ensure that when the smart appliances became available, he could just plug them in. Simple.
He pondered the possibilities. Such as…
Turning on the air conditioning at home before he left work on a hot Melbourne day.
Turning on the spa while driving back from a long weekend of snowboarding.
It was easy. He just needed to make a phone call on the dedicated separate line at the house. Enter the code and the appliance in question would whir into life.
Of course, all of this would work through his new mobile phone at the time, a Nokia 3210.
It didn’t matter about the added expense of the data cabling. Because he was ready for the smart home.
And it came. Smart home appliances have been available for a couple of years now.
Based on some of the products on display at this year’s International CES (formerly the Consumer Electronics Show) in Las Vegas, home automation products will be the tech toy of choice this year. Even for those who aren’t tech savvy.
While Mr Smith envisioned the smart home, it didn’t happen the way he planned. It wasn’t long before a CAT 5 cable became old news and was replaced by CAT6a cables. And within in a couple of years fibre optic cabling was all the electrical and data industry could talk about.
Unpredictable Changes
But then another unpredictable change happened…Wi-Fi.
That’s right. Instead of home automation needing data points, appliances connect wirelessly to your Wi-Fi network.
As I mentioned before, the concept for home automation isn’t new. Products like Google’s recent acquisition of Nest, have hit the mainstream. And there are two reasons behind the growing popularity behind appliance integration.
You see, aside from the convenience of home automation, the idea was that you could save money on bills. For instance, lighting that automatically turns off when you leave the room. And simply turning off your ‘stand by’ devices while you’re not home.
But now, the machines have gone beyond the basics like turning lights on or off, or setting an alarm system.
The gadgets for home automation are getting, well, nifty.
For example Samsung show cased smart TV’s, air conditioning and washing machines…all controlled by your Samsung Galaxy watch of course.
And several American companies offer smart light bulbs and power points programmable by a smartphone or tablet app.
Or there’s this start up, Goji, which show cased it’s soon to be available keyless door lock. Basically, your smart phone controls the door lock via its blue tooth. When you leave through the door, as the blue tooth signal drops out, the door locks.
And as you approach the door, the lock picks up the blue tooth signal and unlocks the door – letting you back in. Oh and there’s the app that takes a photo of who’s ringing your doorbell…and you can even let them in while you’re not home if you want.
Taking it a step up is SmartThings and its smart house design.
A sensor works out you’re awake and adjusts the house to your personal settings – like lighting, heating, and even warms up the coffee machine! Another sensor picks up that you’ve opened the cupboard and tells you basic information you need to know about the day. You can view the SmartThings House video here.
The Future is Already Here
Simply put, the future smart home is actually already here, and it’s doesn’t need expensive data cabling. For a Smart home set up all you need is your Wi-Fi.
That all sounds great. Yet, there is one big problem – security.
For the past couple of years home alarm systems have used Wi-Fi to keep the house safe. But the problem is, your home may be far more vulnerable to cyber risk then it is to any burglar.
But the exhibitors at CES mostly ignored this peril. In fact only one company, Goji discussed the encryption used in the door locks. But even then, it was a brief mention that the door lock had some form of encryption.
The thing is, smart homes are just as susceptible to internet threats as any computer device you have at home.
MIT Technology Review magazine last year highlighted the potential of malicious attacks on home automation systems.
As an example, a bored teenager with a decent set of hacking skills could be tempted to access your home automation network and turn the heater on…on a 40 degree day, which would drive up your electricity costs not to mention make for a rather uncomfortable homecoming.
Or they repeatedly flush your smart toilet.
Let’s stop there. You may wonder why you would want or need a smart toilet. After all how smart does a toilet have to be? It just needs to accept what goes into it and then get rid of it as quickly as possible!
However, a smart toilet could be useful. For example it could analyse your waste to check your level of health, and it could determine how much water is actually needed to get rid of the waste, rather than a default setting. That could save you water and money in the long term. Of course, constant flushing by some hacker would have the opposite effect.
Something more sinister could be to confuse your security system to enable a robbery to take place.
Because the potential for naughtiness is high, two researchers from Trustwave Holdings, a privately owned business that ‘fights’ cybercrime decided to test smart home products being offered to see how safe they were.
David Bryan and Daniel Crowley at Trustwave Holdings discovered the security systems for the Internet of Things (IOTs – a group of machines that talk to each other via the internet) have minimal security settings.
‘It varies from device to device, but a common thread with a lot of these devices is they don’t require any authentication at all,‘ says Crowley. This is a problem Kris Sayce and Sam Volkering have discussed in Revolutionary Tech Investor.
Take Vera Lite from Mi Casa Verde Inc. for instance. These smart home devices control lights, cameras, thermostats, alarms and door locks. It’s also easy to set up. You simply connect the device to your home network and a couple of steps later you have a ‘smart home’.
However, its default setting requires no username or password – a very basic security to say the least. But Bryan and Crowley found that even once these were in place, bypassing it didn’t break a sweat.
Founder of Mi Casa Verde, Aaron Bergen has hit back at claims this system lacks security, and actually insists it’s a design feature.
‘We do not consider it a vulnerability to allow a user to have full control over his own Vera,‘ was his response to the Trustwave criticisms.
Still, in all of the ten home automation products tested, eight had significant security flaws. Aside from Bergen’s defence of his Vera system, no other manufacture of smart home products responded to Trustwave Holdings when notified of the poor cyber protection.
But both Crowley and Bryan don’t think the danger is a lone hacker accessing one home automation system. Presenting their findings at the Las Vegas Black Hat security conference a couple of weeks ago, Crowley told the audience they fear a crime much bigger than one person messing with one house:
‘It might be some effort to get to this kind of scenario, but if breaking into one server means you get to ransack 100, 1,000, 10,000 people’s homes, that’s definitely worth it, and that’s where the real danger lies.‘
Yoshi Kohno is also wary of companies rushing the smart products to consumers without taking further steps to increase their security. As an associate professor at the University of Washington, he studies privacy and computer security in consumer technologies. He feels there needs to be a higher focus on security of home automation products before he’d even consider using them in his own home.
He sees the threat to home lighting systems as minimal. But automated door locks for him are a big no-no for now.
But don’t despair. David Bryan from Trustwave believes the security of smart home products are where cyber security was 10 years ago.
Eventually, tighter encryption and enhanced coding features will appear in this cluster of useful machines.
And while smart homes clearly are the way of the future, there is one other industry that is set to boom with it. Cyber security firms.
You may think that sounds boring. Kris felt the same way when Sam Volkering, the tech analyst at Revolutionary Tech Investor pestered him about the topic a few months back. Kris even passed on the idea the first time.
Kris told Money Morning readers:
‘Before we got stuck into the research we couldn’t have thought of anything more boring than cyber security.
‘But after Sam laid out the big picture, we dug deeper into it and the impact it could have on the world economy. We’re certain that cyber security will be one of the most important industries in the years ahead.‘
Revolutionary Tech Investor subscribers are surely happy that Kris and Sam went ahead with the cyber security stock recommendation. One of the two recommended stocks is up an amazing 81% since October. The other stock is flat, but gains are sure to come as cyber threats continue to rise.
Just think about it. The more and more gadgets you connect to the ‘net, the more vital your internet security becomes.
The reality is that cyber protection is so much more than antivirus software on your PC or smartphone.
Sam tells a riveting tale about past cybercrimes and the companies developing ways to stay ahead of the black hatter’s (the bad guys of the internet world).
Before you go and install the latest home automation products, make sure you understand the importance of protecting yourself online. Checking out Sam’s thoughts on the subject is a great place to start.
Shae Smith
Editor, Money Weekend
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By MoneyMorning.com.au
The Daily Sentiment Index (trade-futures.com) reported 93% bulls twice, on November 15 and 22. Two readings this high are a rarity.
