A recent tweet by Cobie, a well-known figure in the crypto community, led to confusion and over $50 million in liquidations. In this article, we will break down the concept of hash predictions, how this particular situation unfolded, and the lessons to be learned from this incident. Anonymous crypto-insider "FatMan" breaks down the situation.
Hash predictions, in essence, are long strings of characters known as SHA256 hashes generated from a fixed function applied to a specific input. Each unique input yields a distinct hash.
Proving foreknowledge without causing market disturbance: A person can commit to a prediction and reveal the input string after the event occurs, providing cryptographic evidence of their prior knowledge without causing any market disruptions.
Chasing clout: Posting a hash prediction can make someone appear highly insightful if the prediction comes true. However, if the prediction is inaccurate, the person can simply delete the tweet or ignore it, and no one would likely notice or care.
Cobie tweeted an unsalted hash, which was quickly cracked by the crypto community as it contained only five simple words. The cracked string was a prediction regarding an Interpol Red Notice for CZ, the CEO of Binance. This revelation led to numerous articles, tweets and substantial liquidations, which were unintended consequences of Cobie's tweet.
Cobie later admitted that the prediction was based on a rumor. If the prediction had come true, he would have likely revealed the input string to claim his internet points. However, if the prediction turned out to be false, the tweet could have been deleted or ignored without any repercussions.
Unfortunately, the situation escalated, and Cobie's tweet had significant consequences. The key takeaway from this incident is not to trust everything you read online, especially in the volatile world of cryptocurrencies.