Verge assumed that decentralization, anonymity, and being censor-proof were sufficient safety measures. However, its small size could not provide adequate security against the increased mining capabilities of other players.
Verge (XVG) has been operational since 2014 and, from a fledgling cryptocurrency, it has come a long way. Rebranded in 2016 from DodgeCoinDark to Verge, the crypto exponentially sored in value after the rebrand.
However, after three successful 51 percent attacks, the trust in the coin seems to have plummeted. The success of the attack evokes the question: Were safety assumptions of decentralization overestimated?
In the new cryptocurrency industry, anonymity and safety controls are vital. Verge has gained acceptance in the mainstream cryptocurrency ecosystem because of its much-vaunted transparent ledger which also makes the identities of the users anonymous. Founded as a privacy-centric currency, the crypto has drawn admiration from certain quarters. So, why was it targeted?
The cryptocurrency industry has many decentralized projects. Verge founder Justin Sunerok made the best of efforts to ensure that he made the most anonymous and censor-proof coin in the cryptocurrency arena.
Verge was integrated with TOR to eliminate any detection. Sunerok invented a protocol that would rotate through hashing functions and counter the centralizing power of ASIC chips. What eluded him was that Verge was one of the most centralized projects within cryptocurrency arena.
How bad are ASICs?
Well, the vulnerability of Bitcoin Gold lies in the fact that it was intended to resist any industrial-scale mining. Verge similarly made efforts to keep mining within the scale of household computers. But, is ASIC resistance a winning formula?
ASICs are the engines that drive rigs in the large mining firms. They have been a source of controversy in the industry due to their alteration of the market structure of blockchain networks.
The ruthless ASIC mining firms have a strong competitive advantage in the industry and thereby creating centralization in the industry that was seeking decentralization. Moreover, they have some dependency with Bitmain, which is a leading chip manufacturer, that established a susceptible trusted third-party relationship.
Back to Centralization
From the experience of Bitcoin Gold, cryptocurrencies that limit mining to household computers place themselves at the mercy of players with considerable hash power. Mining farms provide some improvements in network security. The bigger players such as Bitcoin offer more protection.
The creator of the blog Crypto51 argues that:
“Smaller cryptocurrencies have less hashing power securing the network, making it possible to simply rent hashing power.”
It is worth noting that, despite the fact that Verge experienced a 51 percent attack, it does not need half of the networks’ hash power. Verge will have a hard time trying to secure its system due to its small size.
In an article titled “Verge Struck by Second PoW Attack in as Many Months” by Kai Sedgwick published in Bitcoin News, it says the Altcoin coding is to blame for its current challenges. Kai quoted a Bitcointalk forum commenter who retorted that:
“Verge is being targeted because it has shitty coding and an incompetent developer. This hack is the result of the terrible job he did ‘patching’ the previous hack. The original attack involved exploiting one of the five hashing algorithms verge uses (most cryptocurrencies such as bitcoin only use one). This time around the attacker is believed to have used two algos after renting power from a service such as Nicehash and then using it to find all the new blocks.”
The attack on Verge and Bitcoin Gold has proved that the whole idea of decentralization was a hyped phenomenon. With the increased mining capabilities evident in the crypto industry, the hashing power of small players remains to be in question.
The Crypto Community is, indeed, shaken by the repeated attacks on Verge and many questions are being raised as to the capacity of the Altcoin to foil future attacks. Even though Verge has suffered immense attacks, it remains to be a currency of choice to many online currency users.