Erik Weijers, 2 months ago
On April 3, influential crypto trader 'Cobie' posted a tweet that consisted only of a hash. In other words: an encrypted message. But somehow, someone decrypted it. It read: “Interpol Red Notice For CZ". As CZ is the CEO of Binance and as Binance was already facing a lawsuit, it wasn't totally inconceivable to be true. What was going on here?
Cobie (Jordan Fish) is in the crypto markets since 2013 and well-connected. The fact that a respected figure such as him would post such a rumor - even though it was meant to be encrypted, made it believable enough to temporarily tank markets. The markets have recovered since.
Now, let's have a look at why Cobie would even want to post an encrypted message. And what is hashing, this core principle of crypto?
Cryptographic hash functions take a string of any length - these can be as short as a blank space or as long as a novel - and produce a fixed-length hash value: an output of hexadecimal numbers.
Hash functions are one-way: there is no way to go back from the hash to the original message. Even changing one comma in the original message, will create a completely different hash.
In Bitcoin's blockchain, each finalized block of transactions is hashed. The output of that hash is included in the next block, which cements the order in time of the two blocks (the original word for blockchain was intended to be timechain, by the way).
Hashing is also very valuable for password databases. Ideally, a company doesn't store your password but a hash of that password. Each time you log in with your password, they can see if the hash corresponds with the one they stored when you created your password. But should the company be hacked; a database of hashes is useless to a hacker.
Besides being an insightful and respect trader, Cobie is also a bit of a troll. Apparently, in this case he had heard a rumor and decided to share it... without sharing it. He has done this before on more than a dozen occasions.
Only in the case the rumor would turn out to be true, Cobie could after the fact say: guys, I already predicted this on April 3d. Just hash this message: 'Interpol Red Notice For CZ'. So, by encrypting the message, Cobie would have been able to prove he knew all along - but without stirring the markets in the meantime.
But wait, how could his hash even be decrypted? If Cobie's hash was cracked, aren't our Bitcoins at risk? Not really. The most likely scenario, also according to Cobie, is that someone of his team leaked the rumor text. He has claimed he will trust fewer people and tweet less.
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