Original subtitles

Okay.

Less than 48 hours ago, that sound had never been heard on this earth.

Suddenly, it has become as much a part of American life as the sound of your

vacuum cleaner.

It's a report from outer space, a radio signal transmitted by the Soviet Union's

Sputnik, the first man -made satellite as it passes over New York earlier this

evening. This is now the satellite which surrounds all of us. In the competition

for leadership in space, where is it?

the finish line.

In the Cold War, it's pretty clear who shot a nuclear missile at you.

You can see it.

But in today's world, it's pretty unclear who just launched the cyber

against you.

People have always been robbing banks. People have always been embezzling

People have always been lying and cheating.

And the Internet just gives people another avenue to lie and cheat and

The nation's largest credit rating bureau may have been the target of a

attack by amateur computer wizards.

TRW's Information Services Division has computer records on 90 million

Americans, 85 % of the breadwinners in this country.

They look at data as ones and zeros that should be liberated and are free for

everybody. And they don't see the boundaries that we all have.

Privacy is one of those things that you don't really notice it until it's gone.

We're entering in a world where all data is now saved.

And this is the end of prehistory. Now your kids are going to have everything

saved.

And that's a real different world.

Good evening, America.

It troubles me to tell you that your personal and private information is in

hands of thousands of people who you never met and will never know.

The stereotype is it's the kid who didn't have a girlfriend, right? And so

spending all of his time down there in the basement, right?

There was something to that. There's sometimes stereotypes at the core of the

stereotype. There's a little bit of truth.

So we had all of these.

kids who were bored and they were exploring and you started to see this

phenomenon where the anonymity of the network let people feel entitled to do

things that they probably wouldn't do otherwise.

The physical morphology of the hacker is something that I think that people have

made a lot of jokes about. And I don't think that the stereotype is necessarily

wrong, that it's somebody with a black t -shirt, drinking a Jolt Cola with a

kind of pale complexion because they haven't been out that much and they

all day and they're up all night. But if you go to hacker conferences like I do,

while that description may...

fit a majority of the people at the conference, there's still ample other

of people who are interested in computers and computer security.

Sometimes hackers mean computer criminals.

I'm using hackers in the term, the old Stephen Levy sense of hackers are

explorers. Just like you have criminal plumbers and non -criminal plumbers, you

have criminal hackers and non -criminal hackers. The media loves to jump on.

The stereotype of a hacker is some little teenager in his basement who's

at midnight on his little computer and breaking into the Pentagon and launching

ICBMs at Russia.

I mean, that's Hollywood.

It makes a good story, but that is not true. A hacker basically is somebody.

They're not necessarily malicious. They're just curious.

I first heard the term hacker in the 80s, and it was in reference to

hacking their way through something in other words someone learning something

that was difficult in context of computer programming you were just

together to get it to work you weren't making it beautiful you weren't doing it

necessarily right you were hacking it together.

Basically what you're seeing here is a modern day hacker space.

You'll find things not just about computers, you'll find people doing

lock picking, computer hacking, cyber security, physics, chemistry, a whole

bunch of stuff. A hacker is a person who pushes the boundaries of their form and

art. And basically you find people here that are polymaths, like people that

actually do multiple things and they're jack of all trades, master of none, but

more often better than a master of one.

The first time I ever heard the term hacker, I was... As a teenager, I was

living in Raleigh, North Carolina, and they had just apprehended Kevin Mitnick.

So, you know, I grew up associating computer hacker with computer criminal.

My early impressions of the word before I really could have lived any of it were

just someone who had the power to work with computers in a way that was kind of

like magic. So they were basically wizards of the computer world.

Mathematician Claude E. Shannon.

of the massachusetts institute of technology designed this electronic maze

to prove any special point but mostly for fun the movable walls of the maze

be arranged to make millions of different patterns through which the

mouse must travel to reach its goal to find its way through the pattern the

mouse proceeds as we would by trial and error

The Pentagon was accused today of not paying enough attention to the security

its computer system. Earlier this year, a network of foreign computer hackers

broke the code of a number of Defense Department computers giving them access

information on American weapons.

We're going to use this modified phone to attack and take over a Windows

computer.

A white hat hacker is doing hacking for a good purpose.

Sometimes they're hired to go in and do what's called a penetration test of a

company and expose any vulnerabilities and report that back.

Other times they're doing research that can benefit the Internet community. On

the other end of the spectrum is black hat hacking, which is malicious.

and it tends to benefit the individual, or sometimes it's for profit of an

organization, or it can be a political expression.

Do you ever come comfortable with the idea of actually serving a little time

what you were doing?

No.

But you still kept doing it. Oh, yeah, of course.

It's an addiction.

It's a complete addiction.

So the prospect of jail wasn't enough to stop you?

No.

Don't have too much time to think about that, actually.

I think part of it is the obsession.

It's the obsession of, I have to make this work. It's kind of like a chess

I have to win.

And it's not like playing, you know, tic -tac -toe. Nobody ever wins, right?

When you play chess, it's very strategic.

Attacking computer systems is also very strategic, and it can take days and

weeks to physically get what you want.

So you have to target it out and figure out where the weak point is. How do I

move there to get... over there under that system it literally i mean i can't

even tell you how long i've stayed up in periods of like time to like hit a

system that i wanted i think when i was younger i just didn't care if i got

caught i mean i still worked really hard not to leave any traces the

ramifications were just never more intimidating than the thrill of doing a

attack and it was always really exciting

The hack that I spent considerable amount of time on, I had to have some

reason that I really cared about that data. If someone tries to keep some data

closed, and it's not some ethical rule that's stopping you, it's just their

-up rule and their attempt at secure technology, then it's almost a moral

imperative to take that data.

The question really is, is the law right? Do we need that particular law?

So even though there's a law that says you can't do something, hackers are

really questioning should it even exist.

For most people that I consider to be hackers, the innovators or

it is a desire to know and a desire to learn, often coupled with a slightly

antisocial belief that the man has been lying to you and that what they're

telling you isn't all there is.

to life.

I think always about the Matrix movie, which I think of as one of the

quintessential hacker movies where there's so much more going on under the

surface and you can choose to blind yourself to it or you can choose to

And the hacker is always going to choose to know.

In October 1957, the United States was losing the Cold War.

Russia announcing she had shot

a man -made moon 560 miles into space where it was circling the Earth at the

dizzy speed of 18 ,000 miles per hour.

The launching of Sputnik and what happened subsequent to that radically

the American attitudes towards their own personal safety or the safety of this

country. When it was reported, it shocked the American people absolutely

belief. For them to pull off this feat sending the first satellite into space

created a kind of atmosphere of questioning.

As to what we were, where we were going, Americans had always prided themselves

on being by far the advanced technological culture of the world. So

really two shocks, in a sense. A culture shock, namely how could these backward

peoples have produced something that we were incapable of doing, but also a

shock in terms of our own national safety, because if they could put a

into orbit, into space, surely they could hit any American city.

that they chose to. As a primary deterrent to war, maintain a strong

retaliatory power.

The Soviets must be convinced that any attack on us and our allies would

regardless of damage to us, in their own national destruction.

Now we were part of a globe in which no one was protected by physical barriers.

In a purely strategic sense, it meant we had to advance so much that we would

have an unavailable advantage over the Soviet Union.

The Soviet Union now has, in the combined category of scientists and

a greater number than the United States.

And it is producing graduates in these fields at a much faster rate. And the

result was the National Defense Education Act.

which called for spending billions of dollars into the sciences, into

engineering. So it seemed to be that we were moving into a world that was

totally unfamiliar to us, a world, again, of computers and of missiles and

sort of thing, just a very confusing period for Americans.

Indeed, according to my scientific advisors, this is, for the American

the most critical problem of all.

Let me begin by taking you back into time to the origins of the Internet.

Before there was an Internet, the Advanced Research Projects Agency and

Defense Department started a project that they called the ARPANET to try out

this idea called packet switching, which is a very distinct way of switching

data around than the traditional telephone system, which uses what's

circuit switching.

So we built a four -node network, and I was lucky enough to be a graduate

student at UCLA at the time.

I wrote the software that connected the Sigma -7 computer to the first packet

switch of the ARPANET that was installed at UCLA in September of 1969.

And by December, we had four nodes up and running. And then by landline across

the United States, and actually a portion of it went into Europe.

That's just for rich men and gabby women.

Nothing but a gadget.

Oh, he says that, does he?

Will you listen to me, Mr. Kendall?

You've got an uncle who's a fool, and you can quote me.

You're talking to a man who helped install one of the very first

there ever was, back in New Haven in 78, who helped string the first line

between cities, from Boston to Providence.

A man who's seen what this telephone has done for the country already in 25

years. A gadget is it? One thing to keep in mind as you're talking about the

phone company in the 1960s and 70s and even up into the early 80s, for the most

part, it really is one giant company. It was all run by AT &T. American

Telephone and Telegraph was a monopoly. It was, in fact, the largest company on

Earth.

Today's telephone network far exceeds Mr. Bell's grandest dream.

And every last inch of it can be linked together to serve the home, business, or

continental defense.

The very size and diversity of this network helped to make it strong.

The telephone system was the closest thing that anybody got to a computer,

the sophistication of the telephone system and the telephone network was

approaching that of a computer.

And so the phone company was really sort of the forerunner of a lot of

computing. Phone freaks were, you know, today they'd be called network hackers,

right? The only difference is they're playing around with the telephone.

Finally tonight we have a report on phone freaks, underground hobbyists who

illegal phone calls around the country by confounding the technology of the

telephone companies with technology of their own. For this phone freaking

business to make any sense at all, you almost have to get in a time machine

because you have to go back in time to a time that is really unlike today.

that in the very old days, when you wanted to make a long -distance call,

you did was you picked up the telephone and you talked to an operator.

And you said, I want to call Chicago, and here's my phone number.

That operator would get another operator on the line, which might involve maybe

a couple intermediate cities, and you'd eventually get to Chicago. So there were

human beings in the loop all the way through.

What made phone phreaking possible was...

When that started to get automated, where operators started to get out of

loop so that you could actually use automated equipment to place a call from

Francisco to Chicago.

And what that meant, the automated equipment had some vulnerabilities in

which allowed somebody with a little bit of technical skill to be able to place

their own calls or reroute the calls or otherwise play with things.

John Draper, who's known as his phone freak handle as Captain Crunch, was the

guy who discovered something really interesting about Captain Crunch cereal.

Back in the day, Captain Crunch cereal came with a little prize, and one of the

prizes was a little tiny whistle, a little plastic whistle. And it turned

that if you covered up one of the holes in the whistle, it actually allowed you

to generate a perfect 2600 hertz tone, and that you could use to whistle your

way into free phone calls.

So if you were good at whistling and you could whistle 2 ,600 hertz, you could

actually whistle your way to free phone calls. And there were several people who

could do that. The most famous was a phone freak at the time known as Joe

Ingresia, later known as Joy Bubbles, who was a blind fellow gifted with

pitch and able to whistle free phone calls.

Let's see if I make it this time.

This is really hard to do. It sounded like all the tones were present, so the

phone should be ringing about now.

Okay, it hit the phone. It just takes a little while to... From his one phone to

a town in Illinois and back to his other phone. A thousand mile phone call by

whistling.

So this is a huge problem because we're not talking about software today where

you just patch a few lines of code and mail out a CD -ROM or have people

download updates from the Internet.

This is physical plant. This is central offices all throughout the country that

are using big, huge racks of equipment that this has got to change if you want

to patch this whole.

Phone calls were really expensive.

It might cost, you know, the equivalent in today's dollars of $55 for a 10

-minute phone call from San Francisco to New York, right? It was really

expensive. Long distance was a big deal back then.

Everyone knows long -distance rates are lowest at night.

But did you know those same low rates are in effect all day on Sunday? You can

make a three -minute station -to -station call to any of 48 states.

For 90 cents or less, anytime on Sunday.

The way a blue box works is it was based on the observation that when a line is

idle, there's this 2 ,600 hertz tone on it. So the first thing you do with a

blue box is once you've dialed a long -distance call and the call is starting

go through, you would send a burst of 2 ,600 down the line.

And that 2 ,600 hertz would confuse the remote central office.

And now they're again listening for those, they're called multi -frequency

digits. So a blue box is kind of like a touch -tone generator that can generate

these special digits.

And with those, you can now dial your own call.

So if you were a bookmaker as part of organized crime, you spent a lot of time

on the telephone. That cost you a lot of money in the 1960s. And even worse, it

left telephone records that the FBI could later get to figure out who your

associates were. If you were using a blue box, you didn't have to do that.

problem the phone company had is that they had, from the 1940s on, based

their...

entire network and infrastructure around this multi -frequency signaling system.

They had been rolling this out across the entire United States. They'd spent a

lot of money on this. And then it turns out that, well, it's got this problem

that, you know, a guy with a blue box and a tone generator, or even a guy who

can whittle, can make free phone calls. And some estimates at the time were that

it would be, you know, upwards of a billion dollars, and this was back when

billion dollars was real money, to fix this whole thing.

So you've got this vulnerability.

What do you do about it?

You can't make it go away overnight.

Even if you had a billion dollars, you couldn't make it go away overnight.

So then you get into this problem of, well, we're obviously going to have to

live with this for a while.

But at the same time, we want to keep this as quiet as possible so that it

doesn't get out that we have this problem.

But then what do you do when you catch somebody, when you catch a college kid

who's figured out how to make a blue box? You've got a blue box outbreak

someplace, right?

What do you do about that? Because if you prosecute and it gets into the

newspapers, you might well have just done yourself more harm than good. Now

everybody in that area reads about it and says, oh, what's the blue box?

That sounds pretty good. I'd like to be able to make free phone calls.

So in 1971, there was an article in Esquire magazine by Ron Rosenbaum, which

called Secrets of the Little Blue Box, which elevated phone frequency and

national attention.

It was so well written and so intriguingly written, it made what was

a boring and geeky hobby of playing around with the telephone system seem

it was something out of an espionage novel.

And it really captured the imagination of so many people.

The phone company now has a real problem because they still haven't fixed their

network. They've got a fix on the horizon, but that fix was going to take

to deploy.

And now you've got all these people who know about it. When phone freaks have a

convention... As they did in the ballroom of a seedy New York hotel

Masks are given out at the door.

People don't give their right names.

And the illegal electronic devices which phone freaks use to defraud the

telephone companies are nowhere to be seen.

So the cat's out of the bag at this point. So at that point, starting right

after, around 1970, 1971, right after the Esquire article, the phone company

started to adopt much more of a prosecutorial stance, where every time

this, we're going to prosecute it, we're going to go to law enforcement.

And now at this point, it has to be just pure deterrence. We have to scare

people into not doing this.

One of the things that the phone company did when it became aware of blue and

black boxes was it started an internal investigation unit. And from 1964 to

1970, they randomly monitored some 33 million long -distance calls.

And of those 33 million calls, they actually tape -recorded between 1 .5 and

.8 million calls.

So in some sense, it's probably the largest warrantless wiretapping campaign

that anybody has ever undertaken, and it was done entirely without any approval

from anyone, the government or anything else. It was simply AT &T doing this.

Keep your eye on that bell, son, and mark my words.

That as this nation grows, the telephone will grow with it, and it will play a

strong part in that growing.

And the future that lies ahead is beyond the belief of any man.

Much of what we've learned about the universe has actually come from radio

telescopes because they can see things that optical telescopes can't.

And behind me is one such amateur radio telescope here in my backyard.

This is a 12 -foot satellite dish that's been repurposed to operate as a

telescope. If you're a professional astronomer, you usually are using very

instruments and you have limited...

time to use them because you're competing with other folks for the

If you have your own system, you can run it as much as you want and observe

anything you wish.

And the people who do this are hardware hackers.

These are folks who, just like in the Homebrew Computer Club, want access to

something that ordinary people normally can't have.

Well, there's no question that what came out of the Homebrew Computer Club

changed the world in a major way.

Some may wonder, when did the computer begin to really compete with television

and radio for our personal attention?

I'd say that for members of the Homebrew Computer Club, that competition began

back in 1975.

Folks building their own systems became obsessed with what they were doing to

the point where not only were they not necessarily watching much TV,

but they were probably not spending much time with their families because it was

very time consuming to design and construct and code your own machine.

One of the most well -known members of the Homebrew Computer Club was Steve

Wozniak.

I was there the night that Steve brought in a circuit board that he said he was

going to call the Apple and wanted to know what we all thought about it. It

pretty cool. He had mounted a circuit board onto a piece of wood and had a

keyboard on it, and it was a self -contained computer.

A lot of the folks in the club were making systems that were somewhat

No one at the time had any idea where his system was going to go.

Nobody in the large corporate environment really saw much use for the

in the home.

In fact, when we first developed these systems, there was a lot of skepticism

that we had heard from people on the outside saying, why do you want a

Who needs a computer?

What good would it be to have one in your house?

And they just didn't get it.

Comes as no surprise to say that it's all but impossible to conduct any kind

business these days without a computer. What is new is that computers are

suddenly becoming a factor beyond business.

Overnight, manufacturing personal computers has become a half -billion

business, one that's doubling every two years.

Stephen Jobs is a 27 -year -old multimillionaire whose large fortune is

something little, the personal computer.

How many calculators do you own?

Two, maybe? Right. And you have to use the automatic bank telling machines?

Sure. So life is already seducing you into learning this stuff.

Random access memory is internal memory that's built inside of this computer.

They talk their own language here. At trade shows across the country, when

manufacturers show off their wares, the house is usually packed.

Small personal computers, selling from $500 to $5 ,000, are fast becoming a

multi -billion dollar business.

And if words like bits and bytes mean nothing, try this one.

Money. I have seen the future, said one industry observer, and it computes.

It is becoming so commonplace that many of us are becoming dependent on it.

Something that didn't exist a few years ago to a very large business today. And

in the future, of course, personal computers, a lot of people anticipate,

be as ubiquitous as the telephone.

Computers have become personal tools as prices dropped and components shrank.

This personal computer costs about $1 ,400 and fits nicely on a desk corner.

The idea of the small computer has become so big that the giant of computer

companies... IBM is busy marketing its new small computer.

IBM spending an estimated $13 million on TV this year alone. Wall Street hit a

record high again today. One of the better performers was IBM.

The first reliable computer was built by an American about 50 years ago. Since

then, computers have multiplied like puree.

Big Mac Day, the day Apple unveiled its new Macintosh computer to shareholders.

Suddenly, personal computers have become the business of at least 25

manufacturers, RadioShack, Apple, and Commodore, grabbing three -quarters of

market. For weeks, the Macintosh has been rolling off the line, one every 27

seconds. A whole generation is being weaned on computers, and manufacturers

that guarantees that computers will become the household appliance of the

future. In more and more schools, small computers are taking over the job of

teaching reading or math or foreign language. A generation of children is

becoming comfortable with computers.

Steve Wozniak co -founded Apple, the most successful of all home computer

companies. In just six years, Apple has become a half billion dollar a year

corporation, leaving Wozniak worth more than $50 million.

Retired now at 32, Wozniak had never been to an outdoor rock concert, so he

$12 .5 million of his dollars and bought one.

The significance of the emergence of the personal computer really can't be

understated. Its impact has been profound and reaches almost every corner

lives.

The big changeover came when people started getting modems on their home

computers. So you got the home computer, and you can play your game on it or

whatever, and there were these bulletin board systems out there.

In the bulletin board systems, you'd have somebody who was a hobbyist also

get a computer and put a couple of modems on it and write a bulletin board

package that allowed people to dial in and yell at each other, make friends,

fight, talk about whatever their hobby was.

200 years ago in this country, notices were tacked up on a tree in the village

square which served as a community bulletin board.

And in the years since, when people wanted to post a bill, they've used

barns, walls, and buses, not to mention newspapers.

But now the village bulletin board has gone electronic.

Generally in your neighborhood or in your dialing area, there'd be maybe 50,

80 bulletin boards for you to call. And in a really small town, there might only

be 5 or 10.

And each bulletin board had a different sort of group of follower.

Like the engineers might like this one, the hackers might like that one, the

game people might like this one, the hobbyists might like that one.

And so...

you'd get accounts on a bunch of systems locally to figure out what the local

scene was like. Phone long distance kept getting cheaper, so it went from the

standalone island bulletin boards to a network.

And some of these networks had thousands and thousands of other bulletin boards.

Back then, it was probably 83 or something, and computers were just

We were in San Francisco near Silicon Valley, and my dad decided it was time

get the family a computer.

My sister had no interest in it, so therefore it ended up in my room. And

when I got hooked, addicted to computers.

And one guy I was totally jealous of, he had a modem. He had a 110 -bot acoustic

coupler modem, which is what you see in old movies now. But through that, he'd

dial up the phone, stick it on the coupler, and dial up bulletin boards in

San Francisco Bay Area. And through my friend's computer, a whole new universe

opened up for me. It was unbelievable.

You could be on a bulletin board chat system.

It's a 14 -year -old kid.

Nobody knows your name. Nobody knows your age. Nobody knows your education,

ethnicity, anything about you. All they know about is what you type on the

keyboard. So their entire opinion of you is based on how logical or how

intelligent you sound.

So you could have these great debates about music or movies or whatever it is,

and for all they know that you could be a professor at Berkeley.

And that was really liberating because it taught me it was all about what you

know. It wasn't about what you looked like or where you were from or any of

because that just didn't come into the picture.

And the other thing is that it opened up this whole other adult universe.

You know, you're like 13, 14 years old. You're kind of sheltered. You know, you

can't drive a car. You're not watching R -rated movies. And here you are talking

about drugs or movies or sex or whatever it is, adult concepts.

You're like 14 years old. The whole world opened up through the computer for

It was awesome. Because in those days, it really did feel like exploring. There

was no standard addressing, the WWF, whatever.

You kind of just got this phone number, and you would get in there, and then

you'd see what was on the other side of that computer and where it led to.

Because there were people who really weren't Internet users. You couldn't

track them back and figure out what machine they were coming from because

were some kid.

sitting in their parents' basement with a modem attached to a computer.

And they were on this fairly small sea of information, but they were completely

anonymous, and they had no vested interest in behaving because they could

misbehave all that they wanted, and then all they had to do was turn off their

connection and disappear.

And I remember back then, you would start to get the first generation of the

games dialers or war dialers who would call all of the telephones in an entire

urban area and see if a modem picked up.

And then when they got a pickup, they would try to log in as guest, password

guest, admin, password admin. And sometimes they'd get in, and it was

shocking. When it makes contact with the wall of the maze and discovers it

cannot go straight ahead, it turns and keeps on turning until it has found its

way again.

It explores each step of the way with its copper whiskers.

Those of us who were running the machines on the administrative side, the

problem that we were seeing was we would just see in our system logs that, you

know, someone had tried to log in as a guest 800 times, and we'd laugh because

maybe we didn't have a guest account, and we'd know that somebody was playing

around. And it was all seen as kind of fairly benign activity because we hadn't

really started to see a downstream cost for all of this kind of activity.

In the mid-'80s, a lot of the hackers would launch physical attacks.

They would go find a phone company office, and they would walk in with a

clipboard and try to look official, and they would look around, and they'd try

to find a modem.

If you found a computer sitting someplace and it had a modem connected

frequently if you turned the modem over, there'd be a little plastic tag with

the phone number that the modem was sitting on, and sometimes there'd be

usernames and passwords.

And some of the hackers had no qualms whatsoever about just walking into a

building.

coming out with whatever information they could. Pretty much every kid who's

interested in science and technology at some point or another goes over the edge

of the dumpster. But there were always people who would be going in there and

looking for printouts, and it was really pretty shocking some of the stuff that

you would find getting thrown away.

Oh, wow, look, it's billing information from the hospital from five years ago.

There wasn't really a model for how to make money off of that stuff. And we

didn't realize at the time how much it was going to wind up costing us in the

long run. It was kind of a hobby environment where people didn't really

like there was anything wrong with going and diving in somebody's dumpster and

trying to come out with whatever you could find.

But things were a little bit more Wild West in those days.

In the early days...

You couldn't own a computer. It was too expensive.

You couldn't get on the Internet. It was only for universities and governments.

You couldn't get a computer programming manual generally, and you couldn't learn

anything about security because there wasn't anything really written. So

everything was closed, and you had to break into it. You had to find a way in.

You had to break into a university to get access on a computer, and then you'd

read all the manual pages learning how did the computer actually work because

there was no...

material available. And then you had to find somebody that knew something about

security and convince them to teach you.

And then maybe you would teach someone else. And then you'd build this

around sharing information.

I think it would have been unheard of in the mid -1980s that if you found some

kid wandering around in a telephone company building that they'd call the

and have the guy hauled off. Nowadays, in the days of Homeland Security, the

would be at Gitmo being waterboarded or something. What were you doing in the

phone company office? All this kind of thing.

But in the 80s, it was kind of cute. And that's how you get these guys like

Kevin Mitnick, who are basically loser sociopaths, but the entire community

them as cute and interesting people. We love you, Kevin!

Kevin Mitnick is arguably the most famous former hacker.

You got me, dude!

At a hacker gathering in Las Vegas, where he now lives and works as a

consultant, he's treated like a celebrity.

He served nearly five years in federal prison for break...

If the 80s was the Wild West, the 90s would have been the gold rush.

That was when things really started to get interesting, and that's when the

knives came out as well, because suddenly you were injecting value into

As soon as the money comes, then you get these streams of parasites coming in

after the money.

And the innocence of the Internet really ended around

1994.

Can't afford a computer at home? It's okay if you have some spare change.

Coin -operated computer terminals have started popping up in public places like

this San Francisco coffee house.

Users send electronic mail all over the globe.

Cost, two bits for four minutes.

Connecting people in new ways has become a major business in this country.

Commercial services like Prodigy, CompuServe, and America Online, which

information into people's computers through regular phone lines, now have 4

million subscribers.

The fastest growing of these services, America Online, charges $9 .95 a month

plus $3 .50 an hour after the first five hours of use.

Soon as the Internet hit, I'm saying within two years, within two years

probably, Dial -up bulletin boards went away. I mean, they died that quickly.

What was the point of dialing up and having the slow interaction where you

get online immediately?

So what happened there is information sharing took a great leap forward, but

community collapsed because anybody could come to your system now on the

Internet from anywhere.

So you got a whole lot of idiots, people that you couldn't filter them out. I

mean, they used to call it the AOL effect.

Dial -up system hit the Internet, and all those people, millions of users,

flooded into the early Internet. It was just, you know, the IQ level just

dropped like a rock. And so that forced the people that were trying to have

serious conversations on the net into the corners, into private groups, and it

stratified the Internet.

AOL was a really interesting aspect of the early history of the Internet.

They used their huge dial -up infrastructure to become this portal to

Internet for millions of people. And that's part of why AOL got so rich, that

they were able to buy Time Warner, if you think about that.

That moment epitomized the early stage of the Internet gold rush.

Here you have an old -school mainline media company, which is used to kind of

shaping American popular culture, gets bought by a bunch of computer kids who

just... appear out of no place. And it was, as we all know now, it was a merger

made in hell. But that was really kind of the symbol of the early stage of the

gold rush. From a security standpoint...

AOLs coming on the Internet brought us millions of new users.

And I think that was really when you first started to see people doing scams

get people's passwords, people doing online fraud.

Millions of new users means millions of new victims. People were literally just

kind of buying machines and plugging them in as fast as they could. And

everybody was saying, well, we'll worry about securing it later.

And now for a traffic report of sorts.

This one is from the Information Superhighway. In a word, it is jammed.

online jams the Internet.

And for some, the World Wide Web becomes the World Wide Wait.

Hacking really changed when money got involved, when computers became free,

AOL gave away free Internet access, when everybody has a spare computer. The

things that were motivating you in the first place are no longer there.

So you have to find a new reason. What's the new thing that motivates you if all

the old motivations are gone?

All of the systems, all of the software, all the components on which the first

couple of years of the big commercial Internet were built, none of it was

designed really with good security in mind.

I'm informed that you think that within 30 minutes, the seven of you could

make the Internet unusable for the entire nation.

Is that correct?

That's correct. It would definitely take a few days for people to figure out

what was going on. This will be an ongoing effort to try to make sure we

all the benefits of the Internet, all the benefits of the computer revolution,

but we develop better defenses and better defenders.

Hacking has changed a lot over the years. It used to be almost an

pursuit. I heard it likened to a spelunking one.

where you're just kind of exploring.

And in the late 80s, early 90s, it very much felt like that. There was this

cavernous, dark internet.

And you could find things in there if you went looking. And most of the people

that I knew at the time that did that were out for access. They were out for

exploration, for learning, that sort of thing. Very few people were out for

profit. Police say they've arrested the cyber mastermind responsible for

infecting 12 million computers around the world. Today, it's very, very

different. Even the hacker mentality.

is a much different breed. Some of the younger kids have a moral flexibility

that would make a Fortune 500 CEO blush.

The hackers nowadays are oftentimes professionals.

They've been trained to do this. They work for organizations that do this.

You yourself sitting at home, you know, shopping online and reading your email,

you are the target. And they're after you and they're after your financial

information. They're after your money.

in Eastern Europe, you have a lot of individuals that are very intelligent

underemployed. And that may sound cliche, but that is the circumstance

they're in. And so they become entrepreneurs.

And they create companies. However, the motivation of the company is not to make

money for the common good. It's to make money for themselves.

And so they remain black hats and they remain hackers.

Computer hackers in Russia reportedly succeeded in breaking into the

money transfer system of Citibank. Organized hacker groups, primarily from

Russia and Ukraine, are said to be targeting U .S. companies, stealing

of dollars in credit card numbers. There's a lot of bias.

that exists.

When I work with U .S. representatives, you know, they will say that, oh, this

other country is attacking us. And then I go to the other country and they're

saying, oh, the Americans are attacking us.

And they're more technologically advanced. So every country is panicking

each other.

The newspaper gets all upset, you know, North Korea or China is hacking into our

computers. Well, yeah, they are.

But the other side is the United States is doing that to Russia and China and

Japan and France is doing it to us and England's doing it to Norway and

everyone's doing it. The advantage that I have is I'm, in a sense, neutral.

I'm in the business of tech, media, cyber security.

I don't particularly represent any government or...

any corporation.

Growing up, being a little boy, I

always looked at technology and media as a means to

Look, a window to the outside.

And my father was the first person who brought a personal computer into the

Soviet Union. And I remember being a little boy, playing on this massive

machine, typing like this, big keys. And all of this made me realize how

important and how fast this technology grows.

It really, truly is a fascinating place.

Three, two, one, zero. All engines on.

You have air, land, space, and maritime.

Cyber is the new sphere. It's the fifth common domain.

It's not just internet.

Cyber is your cell phone, your mobile phone connected to your PC.

which is connected to the grid, which is connected, the grid's connected to the

traffic lights, to the air traffic control, to the satellites, to the

weapons, to the nuclear power station and the arms forces.

So suddenly you have this massive connection everywhere.

It is kind of amazing the transformations that have occurred even

lifetime, and I'm not that old. We've seen just an increase in data being

everywhere and the ability to access things on the Internet.

Whenever my kids ask me a question and I don't know the answer, they say, well,

we should just ask Google. Google knows.

And they just kind of take for granted that information is out there and

available. Privacy was sort of de facto protected in the olden days just by

virtue of how difficult it was to collect information.

And now with computer technology, what's happened is that it's really made the

collection of this information.

Very cheap and easy because primarily a lot of companies have interest in

collecting information about you, and consumers have an interest in giving up

this information about themselves, whether it be to a social network that

who your friends are or to Amazon that knows what books you're interested in or

to Google that knows what you're searching for.

I remember at one point when I was traveling in China and in the gift shops

they like to bring American tourists into, they actually do follow you

and every time you look at something, they're like, They offer a suggestion

that, oh, very nice product, you should purchase it.

And it was kind of a creepy feeling.

And that's sort of what happens online.

When you use a bookseller like Amazon .com, they're keeping information not

about what books you buy and where your house is that they have to ship the

books to, but about what books you browse.

All that information gets collected and stored and is potentially available to

civil litigants and to the government later on. This is some of the most

kinds of information, what books you're interested in, what you search on

Google. You know, Google looks at your search histories and they use that

information for all sorts of purposes.

Think about how you would feel if somebody could get access to...

What you're searching for is basically what are you thinking? What are you

interested in? Some of the most intimate personal information that's out there.

As we move around with our mobile phones, we move from cell tower to cell

and this creates records.

And these records are retained by the service carriers for many years,

ostensibly for billing disputes.

But they can also be used later to figure out where you were at any given

in time.

Every time you have your cell phone on, not even when you're making a call. But

just when you have your cell phone on, that enables them to find out physically

where you are. It's something that I think is really of concern to people.

People think that that information should be private. And we understand

could be followed on the public street, but we think that that requires the

government to have a good reason and to be worth the money for them to appoint

an officer to follow us. In the U .S., we actually don't have very many privacy

laws, which comes as a surprise to a lot of people who just sort of assume that

the government maybe is protecting them.

There is no right to privacy in this country. Let me just say that out loud.

It's not in the Constitution.

It's not in any of the Bill of Rights or any other amendment. There is no right

to privacy. The way it is now, I don't own my own identity. If I give it to

Facebook, they own it. I can't go back to them and say, you know what?

I want to change that. I don't want that to be visible anymore. They say, too

bad. You gave it to us. It's in our systems. It's there forever.

We're going to sell it. We're going to monetize it. We're going to create like

graphic analysis of who our users are so we can better target advertising to

them. People think that they're the customers of Facebook or Google or

LiveJournal or Twitter.

In fact, they're not.

They're the products of these companies that they sell to their customers who

are the advertisers.

The reason Facebook is free, the reason Gmail is free, is not because the

company likes you.

It's because you are their product.

And by making it free, they get a better product they can sell to their

advertisers. Over the last few years, we've heard the CEOs of several major

technology companies talk about the death of privacy.

Eric Schmidt of Google talks about it. Larry Ellison of Oracle.

We're hearing it from Mort Zuckerberg of Facebook that the rules of privacy are

changing and people expect less privacy.

What's interesting is those are the very CEOs that are deliberately undermining

privacy. At a presentation to advertisers in 2007, Mark Zuckerberg

benefits of Facebook's vast database.

On Facebook, we know exactly what gender someone is and exactly how old they are

and exactly what they're interested in. We're finding a very slow and deliberate

ratcheting down of privacy from all of these companies because they make

money from people sharing, from information being visible, from

being collated and networked.

and being seen by others. A lot of my friends have grown up with nothing but

computers. That's all they know are computers.

Well, starting with them, there's an electronic digital record of everything

they've ever done online.

Now, whether or not the record is kept, somebody deletes the hard drive or

throws away the backup tapes, fine.

But records are being kept.

Hard drives, data storage is cheap. It'll be around forever.

So can you imagine the implications? How does that change your behavior if

everything you've ever done is recorded somewhere?

Can you imagine what the presidential debates will be like 20, 30 years from

when they're pulling up your first tweet, your first Facebook love note,

first status change on Google Talk where you said you were going to go get

hammered? I mean, it's fundamentally going to change the way that people

There's a common myth that privacy is about something to hide. I don't have

anything to hide, so I don't need privacy.

But you know that's not true.

I mean, we don't have anything to hide when we sing in the shower or write a

love letter and then tear it up.

Privacy is about us as individuals.

It's about our ability to be who we are without necessarily telling everybody.

I mean, when someone says I have nothing to hide, just ask them, what's your

salary? What are your sexual fetishes?

What kind of diseases do you have?

I mean, it's not about hiding. It's about personal dignity.

This baby is just one second old.

Here in the delivery room of Mount Sinai Hospital in New York, he has just won

his first fight, the fight to life.

His footprints are taken for identification.

He is still less than a minute old, and this is his first record.

This newborn boy and all the others of his generation face a new and serious

battle. which they may not win the right to privacy.

Data is a fundamental byproduct of every computer -mediated interaction.

You used to throw a quarter into a toll booth. Now you use an E -ZPass, and a

record is saved.

You used to chat with someone over a water cooler or across a partition in

office, but now that's done over IM or SMS, and that data is being saved.

Right? So things that used to be ephemeral are now permanent.

And more and more of that data is being saved and sifted through and used by

government, by corporations, by marketers.

I mean, you can find, if you go on the net and you start searching for, maybe

you're going to buy a new house or move in and get a new apartment, start

looking at real estate or rental listings, you go on Facebook and

you're going to see ads.

For real estate companies or rental companies.

And that sometimes feels a bit icky.

We're finding more and more that as people surf on the net, they're being

followed. They're being followed and a profile about them is being collected

then sold to others.

And this is without people's knowledge or consent.

You might sort of know what's going on, but not really.

A meeting of the American Civil Liberties Union in Washington.

These men are fearful that the National Data Center poses a threat to privacy

and the American way of life.

All we can expect is to hold off the data bank for a while, to get in our

links, because there are not only governmental data banks, there are

data banks. The data center is not just here and now.

You build it with the best intentions now, you build it with limitations now,

and tomorrow those...

intentions may pass and the limitations may dissolve.

We always talk about security versus privacy.

There's some sort of balance.

And the government likes to use that trade -off. How much privacy would you

up for security?

Being secure requires you to give up some privacy.

I think it's a false dichotomy. I think it's actually a red herring.

Security and privacy go hand in hand.

We do not feel more secure when our private data is released.

We don't feel more secure.

in a police state with its ubiquitous surveillance.

That privacy is essential for security.

And good security provides for privacy.

It's only bad security that goes in opposition to privacy.

A great example is airplane security.

After 9 -11, there have been exactly two things that have improved security.

The first one is reinforcing the cockpit door. And the second is passengers

knowing they have to fight back.

Those two measures have nothing to do with privacy.

If you think about the airplane security measures that affect privacy, the photo

ID check, the full body scanners, they actually don't improve security.

They're what I call security theater.

Real security goes hand in hand with privacy.

How do we create a world where freedom and expression is still valued and

protected at the same time as security is maintained?

So there will always be a battle, a battle between privacy, security, and

essence of the Internet.

This is Harry Butler, a real great guy.

Harry's a very busy man, and he's conscientious and hardworking.

But security -wise, Harry is naive.

What? You heard me. You don't know what security is.

What do you mean?

Information security has a physical component. There's no doubt about it.

It's not just someone from overseas trying to get in with an exploit.

That's kind of the trick shot of hacking.

There's a physical aspect to it, especially at a local level, where if

can access your data networks, they can steal your data. And we're often paid to

test that.

One of my favorite ways into a company is the smoking door. You'll find like a

car swipe to get in and out.

So all you have to do is find the smoking door, walk up to the door when

one's there, and have a lit cigarette.

When the door opens, just quickly crush out your cigarette and say thank you,

grab the door and walk in, and it works every time.

Another really clever way that I like getting in is a USB key, which

I've written some very simple software that will use the computer it's plugged

into to tunnel out and give us control of that computer.

And then we take that key and we label it, usually something to the effect of

your company's name and HR.

you know, something tempting to plug in. And then we have someone walk that into

the receptionist and explain that they found it in the parking lot or they

it in the lobby of the building and it's got your name on it, it must be yours.

Of course, minutes after the person drops the key, we're waiting for this

get the hookup from the computer when they plug it in and then we're in and

and running.

Would it be dangerous for everyone to walk around with the knowledge I have? I

would worry about that.

Throughout my career, I've made a lot of difficult choices. The temptation to

just do something that goes over the line is always there. I've been working

this for many, many years. I have a lot of experience, and I've been offered

some pretty tempting...

In one case, a briefcase full of cash to do something that was very wrong would

have been very easy to do, probably wouldn't have gotten caught. But you

make a decision in life because once you go to that side and get caught, you can

never really come back.

People can't protect what they don't understand.

How do you evaluate the risk around what's the risk of having a computer

-controlled car?

Well... People don't really know. We've never had computer -controlled cars

before, and it's not something that we sort of intuitively understand.

You know, if you're at the ATM and there's a shady guy next to you, you get

that, like viscerally. Your brain, your little reptile part of your brain says,

danger, danger, something weird here.

But your brain doesn't necessarily pick up that the keypad looks a little

unusual. because somebody swapped it with a keyboard capturing device.

Or where you put your card into the ATM, that looks a little fatter than it

normally does. Well, that's because somebody's put a capture device over it.

We don't get that intuitively, not like a shady character right there.

And so as humans, we just aren't good at estimating and managing risk when it

comes to computers. And that's going to get us into all kinds of trouble.

I see people that will go out to a public, free public Wi -Fi cafe.

And they'll access their banking information or they'll make a purchase

And they won't stop and think, is this a safe place for me to be conducting a

transaction? Is this something I should be doing out in public?

Until we start thinking in those terms, I think we're going to find that the

problem of identity theft and cybercrime is going to be with us for a while.

A lot of people who are on the network, people we want to have on the network,

like my mom and dad, aren't really capable of securing their own computer

or maybe even of understanding why it is that they shouldn't be checking their

email or their bank statement in the coffee shop or something like that.

Or they may just simply...

They misassess the risk. They may understand that there's a risk that

might be using a sniffer and they look around the room and they think everybody

looks pretty busy, you know, reading the paper and drinking their coffee and

they really need to get their email and they take that chance.

I just don't think that it's fair to put the full burden of that on the

individual. There's a whole hobby called war driving, which is just driving

around and accessing other people's wireless networks and seeing how many

can rack up.

It's really easy to just drive around the neighborhood and get into people's

networks. And even if they have basic wireless encryption, that's usually not

preventing people because most of those protocols have been hacked and you don't

even need to do any work to get in. Once you're in someone's wireless network,

then you're seeing all the traffic that's getting sent across.

So if they're typing credit card information or social security numbers,

data can be sniffed right out of the air by anyone.

within range of that network. And there are people driving around just trying to

do that for fun. So if someone wants to steal your private information, they're

probably going to get it. Years ago, you'd have to have a complete computer

system with you to do any hacking or access to a complete computer system.

Nowadays, you can make a complete hacking system out of a cell phone.

This looks like a fairly typical iPhone, or at least it would appear so. This

iPhone has been modified, though, to run applications that are not approved by

Apple. In this case, specifically one designed to remotely take over other

computers from either across the Internet or, in our case, across an open

wireless network. It's actually a cafe.

So we'll start by pulling up a terminal. And in the terminal, what we're going

to do is run an application called Metasploit that will allow us to run an

exploit and take over a machine. You can look at the exploit as how you get into

the vulnerable application.

So having identified a specific computer,

From across the street, over an open wireless network, we'll collect our

first. In our case, we're going to choose a Microsoft exploit, since our

computer that we're looking at appears to be quite behind on its patches. We're

going to choose a payload that causes that machine to give us control of it.

And a payload is what you want the machine to do.

once you've exploited a vulnerable service.

All right, now we're ready to go. Let's give it a try.

We type exploit and enter.

And we have successfully exploited our target. We now have control of it. At

this point, we would set software on this computer so that when the person

leaves the cafe,

The machine would report all user activity.

That activity would include website visited, login ID, and password pair.

We could even activate the camera or the microphone on the particular computer

at will. So we'd have complete control over it. So, I mean, that right there is

pretty cool.

Yeah.

Hacking and causing disruption.

is sipping into the mainstream, into the general public.

You no longer have to be an MIT or Cambridge computer science graduate to

how to hack into a system. You can just be a kid from around the block, go buy a

computer for 400 bucks, have a connection for 30 bucks, and go online

out how to hack into different systems.

Having been through the maze just once, the mechanical mouse is able to remember

the correct path.

Set down anywhere along that path, it takes the most direct route without

a single false turn on through to the end of the trail.

As the crime continues to be effective and make money,

and the victims become more numerous, that you're going to get... the effect

where people start saying, well, someone should do something about that.

And the victim there is going to be freedom on the Internet.

All right, all right.

I'll abide by your red tape regulations.

Red tape regulations?

I'll wear a badge and lock my desk when I go home at night.

But I still say we've got guards for that sort of thing.

We'd have to put a permanent guard on everyone in the business.

We probably could build a society in which it was impossible for people to

from each other, but the consequences of building that society are probably a

society none of us would want to live in.

There'd be a tremendous amount of surveillance. There would be a

amount of onerous security on top of us.

We could build an Internet where there were no hackers.

The downside of building an Internet where there were no hackers would be an

Internet where there was no anonymity.

There was no ability to post anything that was not subject to censorship.

You might find yourself being held liable for anything that you said

could be proven to be having come from you. If we built a perfect internet that

was completely hacker -proof, we have built a perfect surveillance system for

Big Brother that you can never evade.

We meet today at a transformational moment.

A moment...

in history when our interconnected world presents us at once with great promise,

but also great peril.

The very technologies that empower us to create and to build also empower those

who would disrupt and destroy.

This world, cyberspace, is a world that we depend on every single day.

It's our hardware and our software.

Our desktops and laptops and cell phones and BlackBerrys that have become woven

into every aspect of our lives.

The broadband networks beneath us and the wireless signals around us. The

networks in our schools and hospitals and businesses and the massive grids

power our nation.

The classified military and intelligence networks that keep us safe.

And the World Wide Web that has made us more interconnected than at any time in

human history.

The vast majority of our critical information infrastructure in the United

States is owned and operated by the private sector. Traditionally,

military stuff and civilian stuff were different.

Both had planes, the avionics would be different.

Both had computers, they would work differently.

That's changing.

Technology is moving so fast that government can't keep up.

They're forced to buy the same stuff that we use. That's a very interesting

situation.

Everybody is using the same operating systems, the same networking

the same hardware, the same software.

And whether it's a person or a bank or a military or a foreign military, we're

all using the same stuff.

And yes, this is different and we're not used to it. It's not going away.

We're never going to go back to the military being on the leading edge.

Because leading edge moves so fast and only industry has that distributed

ability to try every option and have the correct one succeed.

Only the market can do that. Government can't.

The government is forced to rely on corporate security.

We've just come out with the Cyberscope, which is this probe right here.

And as far as network security, it takes it to a new level. We have over 140

federal agencies that use this, from the intelligence community, Department of

Defense, as well as civilian agencies.

We sell a bit to the military and U .S. government, but we also sell to

organizations that are just trying to audit their system.

So all of a sudden you have the military with...

Next generation cellular communications in an area that typically wasn't

available. The private industry owns at least 85 % of the digital

infrastructure that we are all so dependent upon.

When you mention cybersecurity to most members of Congress, they just kind of

glaze over.

And they don't really get it. They don't want to get it. My administration will

pursue a new comprehensive approach to securing America's digital

infrastructure. I think there is a lack of understanding among the politicians,

and it might be due to the fact that the know -how has moved to the younger

generation, and they are not very eager to move to politics.

I get the phone call, and, you know, hi, I'm from the White House. Well,

actually, I'm really from DHS. Well, actually, I'm the liaison between the

so, you know, I have a couple different titles. But anyway, there's this

Homeland Security Advisory Council we want you to be a part of.

And I'm thinking, oh, that's not so bad. I can read white papers. I can provide

my advice. Sure, yeah, sure. Yeah, I'll take it.

The next day I come into work and I've got all these ethics disclosure forms

Office of Professional Responsibility and security clearance.

I call them back.

How is this really working? What are my responsibilities?

But as a technologist, I get to deal with a lot of questions that touch our

lives every day because almost every government initiative depends on IT

systems. Anything to do with border crossing, that's technology.

Air traffic control, FEMA, emergency communications, all of this stuff relies

computer networks.

But there's never been an overarching coordination.

And to me, that's an acknowledgment that there has never been a recognition on

the part of the federal government that this is a really serious thing.

Nations want secrets.

They're going to break into governments and companies and try to steal plans and

chemical formulas and troop movements and how we route airplanes.

things that might help them at a very strategic level or might give their

companies a competitive advantage.

China's interests have been long -term to look at our government.

And to look at what our military is doing, looking at what various agencies

the federal government are up to, and also what our academic institutions are

capable of doing, stealing research and the intellectual property associated

with universities.

And they even go so far as to look at individual companies and trying to

out what their business plans might be and how they might impact Chinese

companies. CBS News has learned that there are factories in China and

Asia. that are exact replicas of plants in the United States, built with

everything from hacked blueprints and supplier lists down to the settings used

to regulate valve pressures for individual machines.

Two years ago, hackers stole top -secret exploration data from oil and gas

industry giants ExxonMobil, ConocoPhillips, and Marathon Oil. In

Systems of Central Command, the State Department, Department of Commerce, and

NASA were successfully hacked. They lost.

Millions of pages of classified information.

This country is completely under attack 24 -7. And not just our country,

everybody's country.

And not just governments, but companies and corporations.

It's a giant feeding frenzy out there. Here's another question.

And this might have an interesting perspective from the various areas that

come from, the various nations they come from.

What's your nightmare scenario?

In other words, the event that you fear the most.

I live in a world of nightmares.

In fact, I'm in charge of the cyber defense agency in France, and I'm paid

imagine nightmares.

In addition to the attacks on the nation's telecommunications

are also now receiving alarming reports of significant and growing power outages

in major metropolitan areas in the eastern half of the United States.

You're going to see planes being grounded now. You're going to see trains

taking to the track.

People are going to stop moving.

Do we have a declared policy in the cyber realm in the same way we had for

decades in the realm of nuclear weapons?

So I want to answer a question from this morning.

What's your nightmare scenario?

My nightmare scenario is that we spend our time thinking about nightmare

scenarios.

This is important. There's a certain blindness that comes to worst -case

thinking. It leads to bad decisions, it leads to bad system design, and it leads

to bad security.

And you all know an example of this, airline security and the TSA.

That's what you get when you think about nightmare scenarios.

That's what you get from worst -case decision -making.

We will take action against that nation -state. Now, specifically what that is,

I don't think you should say publicly, but we have ways to do that. What

everybody in this room will be judged on, and trust me, you'll all be judged.

when this is all over for years to come, is did we carve out every absolute

option, every piece of power we had?

Cyber war is largely hype.

I mean, it's hype by the media because it's cool and interesting, but it's

really hype by the government trying to seize more control.

I mean, there's a huge power struggle going on in government right now. It's

the NSA, Homeland Security, FBI, over who gets control over the Internet and

Internet security.

And the NSA is winning.

And they're winning by pushing this cyber war fear, this fear of cyber

attacking us. It's largely nonsense. It's largely hype. It doesn't hold up to

scrutiny. But it's big and scary.

And when people are scared, they're much more willing to give up their

liberties, their privacy, their freedoms to someone who will make them feel

safer. Is the public scared?

Yes, and that's a good thing.

Now the maze has changed again.

near its very end. Things go smoothly enough at first as the mouse proceeds on

the basis of information it remembers.

Now it's running into trouble.

But fortunately, it is able to adapt to this new situation.

It resorts once more to trial and error and acquires reliable new information to

replace the old.

My doomsday scenario is a single EMP bomb above the country.

If you can build one nuke and you can blow it up 200 to 500 miles above the

country, the resulting electromagnetic pulse is enough to basically stop almost

all electronics in the United States, Canada, and Mexico.

And when that happens, you're screwed.

There's no fixing that.

It would take us back to the 1920s.

with the resulting population of the 1920s, because that's all our

infrastructure would be. And I think about 180 million people would die in

country within six months.

It's pretty severe.

And that's how dependent we are on technology.

Is there anything that East West or government institutes around the world

working with education programs to help close that divide, make it part of the

mandatory curriculum to help educate kids?

on the foundation of technology?

So I think that's kind of backwards. I think the kids need to educate us. I

mean, the thing about generation gaps is the younger generation always wins

because the older generation dies.

And the way the kids are doing it is the correct way. We're doing it wrong.

We're doing it old, right? Emails for old people, not for kids.

And that's the way it's going to be. So I think better than us educating...

the younger generation, is let them educate us on how they use the net, how

want the net to work, how it fits into their lives so we can build

infrastructure that benefits them.

Because the education is not going to go the other way.

I mean, the internet is the greatest generation gap since rock and roll.

You know, younger people are using these technologies in ways that the older

people can't even fathom.

Regularly, I get people asking me, what can I do to convince my kids not to do

these things on the net? And I tell them, You can't.

And more importantly, they're right and you're wrong.

But the younger generation gets to decide how technology will be used.

I mean, they're going to build the social systems that will be used in the

10, 20, 30, 40 years. Because Internet's about people, about connecting people,

about people being able to find other people of common interest.

We're being able to communicate with their family or friends in ways that

impossible before.

Be able to bring information into communities that didn't have access to

before. To democratize knowledge and information and communication. The

value of this information is so great that it's changing the planet.

But sometimes there's a problem without a solution.

And even a mechanical mouse must have a helping hand.

I'm not sure if I know how to end this story.

Where does this story end? Does it happen anywhere? The problem with ending

we're still in the middle of it. We are in the middle of the information age

revolution.

In 50 years, you can do this documentary, and you know how it ends.

Now, in the middle, we can just guess, and not even very well.

When you're riding the ride, you don't know how it ends.

That's just the way it goes.

On the plus side, it's kind of a fun ride.

This agile, three -wheeled little mouse contains a small bar magnet.

100 relays and electrical circuits. Remember the directions for the mouse.

Dr. Shannon's mechanical mouse demonstrates that machines can learn by

experience and can revise what they've learned when it no longer works. Two

important characteristics, at least, of intelligent behavior.

Lives are being rapidly changed by the development of large computing machines.

A complete computer system weighs 22 ,000 pounds.

When the hero of any science fiction show has a problem, he usually turns to

trusty computer for an answer. Sometimes, they think so hard, they get

They blow their cool.

Around the world, Economic factors will continue to stimulate the application of

computers to new areas.

But advancing computer hardware technology is just one part of the

to Ken Jennings now. Bram Stoker is what we're looking for, and we find.

Who is Stoker? I, for one, welcome our new computer overlord.

Accurately and tirelessly.

Electronic computers.

can trace out the consequences of a thousand possible actions, can pick out

best design among thousands of possible designs, thus providing a better base

for the informed exercise of human judgment.