How One Tweet Triggered $50 Million in Liquidations: Challenges in Crypto Journalism

Last month’s run on Silicon Valley Bank (SVB) was the result not only of a colossal failure on the part of regulators, but of Twitter rumors. The suddenness of SVB’s fall proves that rumors spread online faster than breaking news.

The Twitter hysteria that brought people to SVB’s doors led many to their crypto exchange accounts Monday morning. The reason? A Twitter user predicted that a red notice would go out on Binance’s CZ. A hard sell ensued, leading to a 3% drop in the value of Binance’s native token, BNB.

Crystal Balls

Predictions are a huge part of crypto culture. End-of-year Twitter spaces, tweets and tweet threads, are all ways traders and creators connect online. In fact, the tweet in question utilized a simple but technically nuanced prediction mechanism usually used to timestamp predictions without revealing what the actual prediction is.

Ironically, a mechanism designed to limit the spread of unverified information became the very catalyst for a misinformation event.

Individuals can formulate predictions and encrypt them using a hash function, in this case SHA256. Then they can share the hash in a tweet. If a prediction comes true, then whoever shared the tweet can show the input text along with the correct hash. If the prediction is wrong, that person can delete the tweet and pretend nothing happened.

Blockchain technology uses hashing as its encryption mechanism, and so it is fitting that hashing became a part of predictions. It is also fitting that an industry built on the gamification of simple things (NFTs, roadmaps for PFPs, etc.) would find a way to gamify hash predictions.

What led to the frenzy on Twitter was that the hash prediction in question was in simple enough language that it could be decoded with a fast computer. Thus, the “prediction” got out, and the internet went wild.

Bad Actors?

Cobie hosts the podcast UpOnly, which features a quote from a critic calling it “childish, unprofessional and bizarre.” He is the original source of the hash tweet

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Author: virginia.valenzuela

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