A new bug has been found by YouTube user lylesback2 which allows you to view the hidden passwords (behind the black dots) on the iPhone and iPod Touch OS 3.0.
This is not a 100% method because you cannot see the first charactor of the password but in generel, people don’t have random charactor passwords so it is easy enough to guess.
This exploit allows you to obtain EVERY single password that is hidden by the black dots (email passwords, twitter etc).
The exploit has is tried and tested on OS 3.0 but doesn’t work on OS 2.1 or 2.2 and has been fixed on 3.1.
Here is how to do it: