What is Verge (XVG)?

Verge (XVG) is a is an open-source, privacy-oriented cryptocurrency project founded in 2014 by Justin Sunerok. The project uses a multi-algorithm Proof of Work (PoW) consensus to enhance security, decentralization, and fairer distribution of XVG —Verge’s native coin— to miners.

Verge was initially named DogecoinDark, a fork of Peercoin, before rebranding in 2016. 

This article serves as a comprehensive guide for Verge, one of the oldest privacy networks in the cryptocurrency industry. It explores its innovative approach to consensus, tokenomics, and security components.

Founders & History

Initially promoted by a pseudonymous developer called Sunerok, Verge’s creator exposed himself to the crypto community as Justin Valo. Other important members are Mihael Radoslovic, Director of Operations, and Mark Wittenberg, Business Development Strategist.

Valo graduated from high school and started his career as a programmer. A few years later, he became interested in Bitcoin and Dogecoin (DOGE) and identified a gap in the altcoin market. 

Overall, Valo was dissatisfied with the lack of privacy on most existing altcoins at the time, leading him to develop Verge, which debuted without an ICO or pre-mined coins, leaving financial incentives for the team.

In 2017, Valo was appointed to the advisory board of TokenPay, another privacy-centric cryptocurrency. Overall, the team is composed of pseudonymous volunteers from various countries. 

Security Incidents 

Despite its privacy-focused technology, Verge has faced security breaches. Notably, its technology wasn’t hacked. Instead, it was a victim of the classic 51% mining attack, which occurred in April 2018. 

The attacker exploited a bug among the five algorithms, enabling hackers to manipulate timestamps on blockchain blocks, lower miner difficulty, and mine coins more rapidly than others. The Verge team assessed the situation by implementing a network update, but another similar attack occurred a day later. In the end, the attackers drained $1.7 million worth of XVG.

Since the developers fixed the loophole, there has not been a single incident, and Verge’s privacy tech stack has never been compromised.

How Does Verge Work?

Verge prioritizes privacy by integrating Tor and I2P—Invisible Internet Project, a fully encrypted private network. While Tor masks users’ IP addresses, I2P encrypts the data for enhanced anonymity. Its Simple Payment Verification (SPV) technology enables swift transactions with low fees.

As mentioned earlier, Verge uses a multi-algorithm PoW consensus. This allows users with different mining rigs to mine XVG based on their setups.

More technically, Verge integrates five different mining algorithms: Blake2s, Myr-groestl, Lyra2rev2, X17, and Scrypt. This approach makes the network more decentralized and includes different types of mining hardware, including GPU mining rigs, CPUs, and ASIC miners. However, despite being PoW, using different algorithms and mining equipment contributes to the network’s high processing speed.

Transaction Speed & Scalability 

The Verge blockchain can process transactions in 5-10 seconds, which is considerably lower to the 5-10 minutes required to process BTC transactions. It’s not just the throughput; Verge is more scalable than Bitcoin, capable of processing up to 100 transactions per second (TPS), whereas Bitcoin processes around 7. This allows Verge to have several use cases and applications across various sectors, including payments, donations, e-commerce, privacy transactions, and more.

Businesses could use VergePay, which uses the Tor network to route traffic between users’ wallets, concealing their IP addresses and safeguarding their privacy during transactions. Moreover, businesses could integrate XVG by using one of the platform’s integration partners or existing APIs, such as the Micro Merchant solution.

Another key component of Verge is Stealth Address. This feature allows the senders to generate one-time wallet addresses for recipients. Additionally, Verge supports Atomic Swaps, facilitating trustless peer-to-peer cross-blockchain transactions.

Finally, all transactions on Verge are processed over TOR via Simple Payment Verification. SPV is a light client that confirms blockchain transactions without running a full network node. Light clients are popular in crypto due to their multiple advantages. Since they only require a fraction of full nodes’ storage and computing power, light clients provide network accessibility for devices like smartphones and browser extensions.

Verge Tokenomics

Verge’s native coin, XVG, has a maximum supply of 16.5 billion. The high supply cap was designed to maintain a low token value—XVG has never touched the $1 mark—facilitating whole payments and minimizing the risk of market manipulation by limiting significant acquisitions. The rationale is to bolster the network’s stability and decentralization over time.

Similar to Bitcoin, Verge undergoes regular halving events. Block rewards are cut by 50% for every 500,000 blocks. This gradual reduction should make XVG more valuable over time by curbing the supply of newly mined tokens. 

As per current emission rates, the next halving for Verge takes place on July 9, 2024, at block number 7700000. The current block height is 7478327.

Verge’s Competitors

Monero and Tornado Cash are two of Verge’s most direct competitors, each employing different strategies for privacy and anonymity.

Similar to Verge, Monero leverages a PoW algorithm. The main difference is that Verge employs five different algorithms for fairer XVG mining and higher decentralization. However, privacy-wise, Monero uses state-of-the-art cryptographic techniques to obscure transaction details on the blockchain, making it extremely difficult for third parties to track sending and receiving addresses or transaction amounts. 

Meanwhile, Tornado Cash is a privacy tool that works on various chains. It takes cryptocurrency funds and mixes them with other crypto assets multiple times, obscuring the trail back to the source.

These projects have separate cryptocurrencies and employ different methods to ensure privacy and anonymity, yet Monero remains the most significant protocol by market capitalization and popularity.

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