The next stage tells us the password is in the only human readable file inside the “inhere” directory. The first thing I thought of was using the file command to inspect everything in the dir and find something that was text. I was foiled for a second due to all of the files starting with a dash, but got around that by using xargs.
bandit4@bandit:~$ ls
inhere
bandit4@bandit:~$ cd inhere/
bandit4@bandit:~/inhere$ ls
-file00 -file01 -file02 -file03 -file04 -file05 -file06 -file07 -file08 -file09
bandit4@bandit:~/inhere$ file *
file: Cannot open `ile00' (No such file or directory).
file: Cannot open `ile01' (No such file or directory).
file: Cannot open `ile02' (No such file or directory).
file: Cannot open `ile03' (No such file or directory).
file: Cannot open `ile04' (No such file or directory).
file: Cannot open `ile05' (No such file or directory).
file: Cannot open `ile06' (No such file or directory).
file: Cannot open `ile07' (No such file or directory).
file: Cannot open `ile08' (No such file or directory).
file: Cannot open `ile09' (No such file or directory).
bandit4@bandit:~/inhere$ ls | xargs -I fl file ./fl
./-file00: data
./-file01: data
./-file02: data
./-file03: data
./-file04: data
./-file05: data
./-file06: data
./-file07: ASCII text
./-file08: data
./-file09: data
bandit4@bandit:~/inhere$ cat ./-file07
XXXXXXXXXXXXXXXXXXXXXXXX (actual password not shown)
bandit4@bandit:~/inhere$