VYSYN VENTURES WEEKLY INSIGHTS #9
During the week, the social media behemoth Twitter was severely hacked. The hacker accessed Twitter at the admin level and sent messages from high-profile individual accounts including Warren Buffet, Elon Musk, and Kanye West. Company accounts were also targeted to send messages with the Cash App, Apple, and Binance all sending out tweets.
The subject of the messages was Bitcoin. Some are referring to the event as the greatest publicity event for BTC since 2017. The huge investments made daily into content marketing and advertising to attract eyeballs on Bitcoin were easily surpassed by one hack.
The tweets shared a common proposal. They requested that readers send BTC to a given address. They were promised to receive double the amount in return. The scam is reported to have received over $126,000 in BTC.
The tweets were well-crafted. Most specified a maximum amount that the sender was willing to return. The hackers also used a subtle tactic of sending the Bitcoin between recipient wallets to inflate the number of people that appeared to be sending funds to the wallets.
However, the event highlights that the crypto community is maturing. The reach of the compromised accounts was phenomenal. Collectively, the accounts had over 139 million followers. Yet, the hack only generated a small amount.
In 2017, “send 1 ETH and receive 2 in return” was a common scam which many fell for. As these scams saw success, the market became educated about the common traps to avoid.
The majority of crypto Twitter today consists of accounts which were active in 2017 or before. Therefore, despite the enormous reach of the compromised accounts, most who saw the tweets and held Bitcoin would have immediately known that the accounts had been compromised.
If the attack was timed after a new bull market, the outcome may have been different. However, prices have mostly remained in a downtrend since the 2017 bull market which means that new waves of uneducated retail investors that may have fallen for it still sit on the sidelines. For this week’s VYSYN VENTURES release, we detail how the attack happened and analyse its impact.
Who Hacked Twitter?
In a July 15th article for VICE’s Motherboard, it was reported that a Twitter employee was responsible for the hack and that the admin tools to access the Twitter platform were being shared on the dark web. A source informed Motherboard that “we used a rep that literally done all the work for us”.
Motherboard originally showed images of the tool used to make the hack possible. However, these images have since been taken down.
Twitter is currently conducting an internal investigation. The Federal Bureau of Investigation (FBI) is also launching their own investigation into the incident.
What Was The Motive For the Hack?
If the goal of the hack was to generate money, more effective messages could have been sent. Accounts such as Apple, Warren Buffet, and Elon Musk are tied to some of the most valuable companies in the public equity markets.
A short position in such companies combined with a tweet hinting disruption would have been a recipe for enormous profit. The official account of Apple tweeting that their production lines are disrupted and that huge delays are guaranteed would be almost certain to have a huge impact on the Apple share price.
It is worth considering that the motive behind the attack may have been to promote Bitcoin. If it’s motive was to provide publicity to Bitcoin, the hack was a huge success. Google Trends data shows that searches were over 10% higher during the past week when compared with the previous week. If the hack was simply for money, it also raises the question of why the hacker didn’t choose an altcoin with strong privacy technology.
Why Was a Privacy Coin Not Used?
Despite what we may hear in the media, Bitcoin is neither private nor anonymous. Every bitcoin transaction is published to an open blockchain that anyone can see and investigate. If the goal was to monetize the hack, why was Bitcoin used instead of a privacy coin that is designed to hide the user and hide the transactions? The answer is simple – brand recognition.
Bitcoin is known all over the world and more people get involved every day. Altcoins simply do not have the same network effects as Bitcoin. The biggest altcoin by market cap – Ethereum – has a blockchain which is also easily auditable. The highest-ranked privacy coin by market cap is Monero which is currently ranked 15th in the market cap rankings. Furthermore, most who hold Monero hold it on exchanges which makes the holdings auditable in some circumstances.
According to blockchain analysis company Chainalysis, the scam netted over $126,000 from over 400 transactions. It is reported that some of the funds are currently on the move. The hackers do have privacy options such as CoinJoins at their disposal if they wish to attempt obfuscating the origin of the funds.
Square and Twitter Impact
This hack is the latest in a line of controversies surrounding Twitter. In 2017, a former Twitter employee deleted President Donald Trump’s Twitter account on their last day of employment. Twitter has also been accused of having a political bias against conservatives on its platform. Despite the enormous security blip, the share price of Twitter has been minimally impacted by the event.
Twitter share price not declining as a result of the hack may make sense from some perspectives. Despite a huge security vulnerability, revenue will only have been impacted if advertisers have stopped using their platform due to the hack.
However, Twitter may have even gained more business due to the hack after all major news publications reported on the event. The next earnings release will make it clear whether Twitter’s revenue has been impacted by the hack.
The share price of Jack Dorsey’s Square, the company behind the Cash App (one of the accounts which were impacted), may have been slightly impacted. The share price trades roughly 3% lower than its 15th of July opening price.
Given that only $126,000 was received from the tweets that were sent to a collective audience of over 139 million, the impact of the hack seems to have been far less negative than it could have been. The hack also gave both Bitcoin and Twitter viral mainstream attention which may benefit both networks by increasing their user base. For daily updates on events such as the Twitter hack, join the VYSYN VENTURES Telegram channel.