The Future of Cybersecurity Is Being Written in the Israeli Desert

In its ambition to be the cybersecurity capital of the world, Israel is busy building a vast military-industrial security megacomplex in the working class city of Beersheba, improbably located in the southern Israeli desert.

The city of Beersheba, population 200,000, is Israel's fourth largest, but its image is a far cry from that of Tel Aviv or Jerusalem. Historically, it's better known for immigrants, Bedouins and the Biblethan it is for innovation and high tech. The Negev desert region where the city is located makes up nearly two-thirds of Israel land mass, but contains only 10 percent of its population. But the Israelis are making the desert bloom.

The Beersheba cybersecurity complex underway is said to be the biggest infrastructure project in Israeli history, a multibillion-dollar compound of army bases, academic research centers and high-tech startups finding innovative new ways to keep people safe from criminal hackers, foreign and domestic. In January, I took a tour of the complex with a group of journalists to learn how the new technology works.

Beersheba rises out of the landscape suddenly: one minute you're driving through empty fields and farmland, the next you're among the hundreds of newly-built limestone homes and palm tree-lined boulevards that give the city its distinctive look.

On the military side, the Israeli Defense Forces is building a new base of operations for its cybersecurity division, devoted to information technology and cyber warfare, on a now-empty plot on Beersheba's northern fringe. A mile into the desert, the Ministry of Defense is also building a 1,200-acre base to house the country's secretive intelligence headquarters, which is currently sitting on valuable land near Tel Aviv.

Together, the army and spy bases will accommodate about 20,000 high-tech cyber soldiers, whose jobs will include defending Israel from hacks by terrorists or thieves abroad, and also carrying out occasional offensive operations, like the suspected remote disabling of Syria's air defenses that allowed Israel to bomb the country's nuclear facilities in 2007.

Next door, the corporate side of Israel's gigantic security project is an office park known as "Cyberspark." With its polished, modern buildings and manicured walkways, the campus looks a little like Silicon Valley, but much smaller. The 20-acre development will eventually host 15-20 high-rise buildings, designed to accommodate tech companies from all over the world, as well as a smattering of young Israeli cyber startups.

Two of the glassy corporate structures were already complete when I visited, and stood shimmering in the winter sun. The offices are home to about 30 companies, like IBM, EMC, Cisco, PayPal, Deutsche Telekom and Lockheed Martin. Every few weeks, another major company from the U.S., Europe, East Asia or Latin America announces its plans to open a cyber research and development branch in Beersheba.

All of this—except the NSA-style intelligence base, which will be outside the city—sits within a small, easily-walkable radius. The area is sunny and warm and pleasant to stroll through. Israel is trying to lure its brightest young citizens to get jobs here.

The Israeli government offers companies seven years' worth of financial benefits to set up shop here. The grants are made in proportion to employees' salaries, and from Israel's point of view, it makes sense to be snatching up these skilled workers as soon as possible.

"Cybersecurity is something you will only need more of as humanity gets more tech-oriented, but eventually the boom will settle down and companies won't open up new activities as much as they do right now," Tom Ahi Dror of the Israeli National Cyber Bureau, a new agency designed to help protect citizens against hackers, told a group of journalists visiting the complex. "So we want as much activity to be set up right here, right now."

Corporations here also have easy access to a new talent pool from graduates of the IDF's cyber and intelligence bases, or from Ben Gurion University, about a five-minute walk away over a new pedestrian bridge. Hundreds of scientists and thousands of students at Ben Gurion University do research at the school's unique cyberattack simulation and malware analysis laboratories.

Israeli cyber skills are some of the best on Earth. Army service here is mandatory, and the smartest kids are handpicked out of high school by the IDF to serve in top intelligence-gathering units, where they get intense hands-on experience defending Israel from cyber threats and occasionally carrying out offensive operations. When they finish their services, these men and women are in their early twenties, ripe for careers in the lucrative startup world.

While attracting the cyber research departments of existing companies, Cyberspark also nurtures new ones. Jerusalem Venture Partners is a billion-dollar venture capital fund that invests an average of $10 million in young startups in the cybersecurity, mobile, and big data industries. It incubates eight startups in Beersheba that all seem to be pushing the envelope in digital security.

One of these startups, Secret Double Octopus—yes, that's its real name—says it's come up with a new way to protect our most private information as it zips through the web.

These days, when you log in to an online account like Gmail, or if you use mobile banking, your device uses encryption methods like VPNs or SSL certificates to verify that you're really communicating with Gmail or Bank Of America and not an imposter. This type of modern encryption works by using "keys," strings of code that must match a complementary string of code provided by Google or Bank Of America, or whatever website you're communicating with. This invisible transaction happens hundreds of times a day for most of us.

But this technology, which is designed to prevent hackers intercepting our information, has hardly changed in the past 40 years. Meanwhile, criminal hackers have burnished their skills: The rise of supercomputing has allowed them to crack these codes and steal sensitive information as it's in transit. The "Heartbleed" bug discovered in 2014 exposed the vulnerabilities of modern encryption to many, making these supposedly secure codes exposed to hacks by anyone on the internet over two-year period.

So here is Secret Double Octopus's somewhat radical solution: It takes your digital passport—that little bundle of data proving you are who you say you are--and shreds it into lots of little pieces. These pieces are then sent over multiple channels like WIFI, cell networks or Bluetooth to the server you're trying to reach. When the shredded information reaches its destination, it gets reassembled.

"Basically, it uses a set of algorithms that are completely unbreakable, even if hackers have unlimited time and unlimited computing power," says Amit Rahav, the company's VP of marketing. "Think of it like a mathematical equation with two unknown variables. Nobody will be able to solve it, even if they create the supercomputer of the future. Because there's just not enough information."

These days, more and more of the things we rely on every day are being connected to the Internet—like our TVs, cars and even refrigerators. "Think about a car whose entertainment connects to the internet, so you can stream some nice music while you drive," Rahav says. "You've now opened the door for hackers to come in and take control of your car."

As the number of connected devices in our world soars, the more important securing our digital information becomes.

Just down the hall from Secret Double Octopus is another startup breaking the mold in the cyber defense world. The company, SCADAfence, aims to prevent cyberattacks on industrial facilities—like the one perpetrated on the steel mill of a large company in Germany in 2014, when remote hackers were able to cause physical explosions using a basic "spear-phishing" email campaign—and attacks on critical infrastructure, like the one in December, where suspected Russian hackers caused power outages for tens of thousands of people in western Ukraine.

SCADAfence's technology claims to prevent such attacks by monitoring the productionoperations of public utilities and manufacturing companies—the network of computers controlling sophisticated industrial operations. The network generally operates on the same pattern every day. Most industrial facilities or power grids or other types of infrastructure are very deterministic: their daily activities almost never change, which means it's easy to detect abnormalities in the patterns, but also difficult to do so without disrupting those patterns, since they are very sensitive to changes.

SCADAfence analyzes exactly how these computers interact with each other: what kinds of commands are being given and received, when they're being given and received, and so on, so that if anything weird happens—like operational downtime or any manipulation of the process—the company will immediately detect the abnormal activity and alert the client, said the company's 26-year-old CEO, Yoni Shohet.

In recent years, more and more companies and utilities are connecting their critical assets like factories or energy grids to online networks. This process is known as the industrial internet-of-things, the idea being that if machines and manufacturing processes can communicate with humans and with each other, it will improve the efficiency and reliability of the industrial systems we rely on every day.

"The production facilities for a lot of big companies—whether they're in the food and beverage, pharmaceutical or chemical industries—were built 20 or 30 years ago," says Shohet, who is a former Israeli intelligence officer. "They used to be totally disconnected from the world."

As connectivity increases, though, so does the threat of a devastating attack. A July report by the insurance company Lloyd's and Cambridge University found that a large attack on the power grid of the U.S. eastern seaboard could cause damages of up to $1 trillion.

Cybersecurity essentially combines two things Israel is really good at: technology and self-defense. Israel has been a leader in the space for years. Because of its lack of natural resources, the nation has focused on technological innovation as a means of survival, and it has also been forced to learn how to defend itself from all kinds of threats posed by an array of hostile regimes and militant groups on its borders. In the virtual world, says Dror of the Israel National Cyber Bureau, "your phone and your laptop are the border."

While people tend to view cybersecurity as a dark subject, it can actually be a great enabler of technology, Dror says. "Think of these new medical devices implanted in human bodies, which doctors can connect to without cables. You can't have progress there without security. Security is one of the biggest inhibitors of progress today--and we see Israel's role as a major benefactor of this progress worldwide."

For decades, Israel has tried to settle the inhospitable Negev desert, seeing it as the final frontier for a growing population and rising numbers of immigrants. In the 1940's, Israel's founding father David Ben-Gurion spoke of the "revival of the Negev" as the mission of his generation, and forecast that Jewish scientific prowess was the key to that revival. Beersheba may just prove him right.