Blockchain: Proprietary
Classification: Currency
Function: Privacy Coin
Project Status: Functioning
Circulating Supply: 14,921,761,167 XVG
Total Supply: 16,555,000,000 XVG
Market cap: $1,012,047,561 USD
Exchanges: Binance, Bittrex, Upbit
Consensus Algorithm: Multi-algorithm Proof-of-Work
As of 05.26.2018
Verge Currency is a cryptocurrency with a focus on the anonymization of its users and their transactions. Verge began in 2014 as DogeCoinDark. In an attempt to distance themselves from the less serious reputation associated with DogeCoin and the potential negative connotation with “Dark,” the team rebranded to “Verge Currency” in 2016. Verge Currency’s core tenant is a commitment to privacy, anonymization, decentralization, and user choice.
Why Blockchain?
Privacy is an increasingly desirable feature of cryptocurrencies. This is clear from the number of already established coins/tokens using privacy as their main selling point. However, there is stiff resistance to entirely anonymous and fungible digital assets from centralized governments and banking systems. An argument for regulation, or worse black-listing, can be made that fully anonymous users and untraceable transactions may result in criminal activity.
Regardless of that possibility, privacy, or the expectation thereof, is a fundamental right in most developed nations. Furthermore, privacy is not just for individuals. A business performing transactions on a blockchain may wish to protect their payment information or competitive advantage from corporate espionage. A business may also desire some of their transactions and payments to be public for accounting/transparency purposes. A digital asset that can facilitate both privacy and transparency based on user choice could create a great middle path.
Overview & Technology
Verge Currency’s first step to the anonymization of their users is to route transactions through relay services such as TOR and I2P as opposed to the clearnet. The end goal of these relay services is to obfuscate a user’s IP address from watchful eyes. TOR is a peer-to-peer circuit-based network of relay nodes used to obfuscate IP addresses. The acronym TOR is short for The Onion Router. The name implies wrapping the information sent by your IP address in layers of obfuscation to keep the user and its information anonymous. By routing information through the network of relay nodes instead of through an individual middleman (ISP), the original IP address becomes difficult to trace. The IP address changes multiple times, and no single TOR node knows the entire route the information will take.
I2P, or the Invisible Internet Project, is an anonymous network layer that allows for peer-to-peer communication. Traffic is end-to-end encrypted and routed through a volunteer-run network of tens of thousands of computers dispersed globally. I2P is an open-source project and available under multiple licenses. I2P is an obfuscated tunneling service that operates on IPv6. IP2 anonymizes data sent over the network via packet-based routing, whereas TOR uses circuit-based routing. The network is coordinated using distributed hash tables and is effectively a decentralized peer-to-peer network.
Users may transact via the Electrum wallet over TOR or I2P; however, they cannot use both simultaneously. There are separate clients, installations, and setups for TOR and I2P. The QT wallet incorporates TOR into the wallet without needing to install, configure, or operate anything else.
The XVG Electrum wallet is a software fork of the original Bitcoin Electrum wallet. It uses Simple Payment Verification (SPV) technology to verify transactions, so downloading of the entire blockchain is not required. Transacting over TOR requires a separate download and installation of the TOR browser. Users must also run the TOR browser before running the Electrum wallet. As the wallet is essentially just an Electrum wallet with a TOR server configuration, users may still be vulnerable to entry/exit node traffic monitoring. Installation and setup for Windows are relatively simple and straightforward. Setup and configuration for Linux or OS X are more complicated and not user-friendly.
The Electrum I2P wallet may be downloaded from the Verge Currency GitHub but is strangely absent from the wallet downloads page on Verge’s website. Download and installation of I2P is required, and the setup and configuration of I2P is elaborate and not user-friendly.
QT wallets are available for Windows, OSX, and Linux. QT is an application framework and widget toolkit that works across all platforms. It is intended for the creation of GUIs and apps that work with any hardware or software platform without requiring extensive changes to the underlying codebase. Download of the blockchain is necessary. It is possible to sync the wallet without downloading the blockchain; however, it may take days, weeks, or it may never sync at all. Downloading the blockchain requires time and hard drive space as it is several gigabytes. The Core QT wallet is currently the only wallet with stealth address support.
iOS is currently not supported however the Verge team claims a wallet is in the works. The iOS wallet GitHub is based on the Bread iOS wallet, though the GitHub has not been updated since September 2017.
The Verge Currency Android wallet is unique in that it was designed from the ground up to operate using the TOR protocol and has no ability to transact over the clearnet. Transactions use simple payment verification (SPV) to ensure fast transaction times and nearly instant confirmation. Users may secure the wallet with a password, app pin-lock, and a fingerprint if their device supports fingerprint scanning. Similar to the Electrum wallet, the Android wallet must be used with a TOR proxy simultaneously. This is achieved with Orbot. By default, the Android wallet will generate a new address for every transaction unless the user manually overrides. While the Orbot TOR proxy can help anonymize traffic, it is still susceptible to entry/exit node traffic monitoring. Additionally, when using Orbot, a user must allow all app data and traffic to use the proxy. If only the wallet is transacting over TOR and other apps are transmitting data via clearnet, a user’s IP address will be easily discoverable.
Verge Currency supports peer-to-peer transactions across several platforms. Currently, users may deposit and send XVG over Telegram, Twitter, and Discord. The Verge team claims support for Slack, Steam, and Reddit are under development. 2-way peer-to-peer encrypted chat functionality, known as VISP, is included in the Core QT wallet. All communications are encrypted via AES-256-CBC encryption algorithm. Distribution takes place on the existing Verge P2P network. Copies of communications are stored on nodes for 48 hours. Messages are signed with the keys of the sender, ensuring their origin and allowing for the sender’s public key to be extracted for reply.
The second step to anonymize Verge Currency users is the much-lauded Wraith Protocol. Wraith Protocol is marketed as a toggle switch to allow XVG users to switch between a public ledger and a private ledger. This is a misleading claim. There is no private ledger that hides transaction data from the blockchain explorer. To do so would violate the principle of immutability of the blockchain. In reality, Wraith Protocol is the combination of stealth addresses and IP obfuscation via TOR in an attempt to anonymize XVG users and their transactions. The Verge team’s portrayal of Wraith Protocol has resulted in a great deal of misinformation and contention within their community and the greater cryptocurrency community. Wraith Protocol does not hide the transaction data from a blockchain explorer, but it does obfuscate some data within the transactions.
Stealth addresses are already in use by several cryptocurrencies and have existed since at least 2014. They allow a sender to send funds to a recipient with a one-time-usage address. Only the recipient of the funds can identify and access the funds sent to the stealth address. The recipient is not required to interact in any way with the sender. While the recipient’s addresses are protected from being linked to the sender’s addresses, the sender can still be discovered through blockchain analysis. Stealth addresses are not linkable through the blockchain, but they are traceable since nothing is done to obscure inputs and outputs. Further, some exchanges do not support stealth addresses, limiting their utility as a privacy option. Currently, stealth addresses are limited to the Verge QT wallet. The Verge team claims they will be added to the Electrum and Android wallets in the future, but their respective GitHub repositories do not have any recent updates to reflect those claims.
Verge Currency integrated BIP65 Atomic Swap capability in a previous release of the Core wallet. Atomic swaps allow for interoperability between other currencies in active circulation that also have atomic swap capability. Interoperability is achieved by allowing trading of supporting currencies without trusted third parties, such as exchanges. Effectively, it is direct P2P trading between separate blockchains. BIP65 Check Lock Time Verify, otherwise known as Hash Time-locked Contract, is a payment system using hash-locks and time-locks. The receiver of a payment is required to acknowledge receipt of payment by creating a cryptographic proof by a deadline or forfeit claim of payment, thereby returning the payment to the sender. A typical exchange is effectively replaced with a decentralized exchange, allowing users to keep funds in their wallets and not depend on intermediaries that could become a single point of failure. The Verge team claims that users will be able to use the atomic swap capability with Wraith Protocol, meaning users can use stealth addresses and transact over the TOR relay network.
Verge Currency has plans to support smart contracts, RSK or the Root Stock Project, is a side chain designed to integrate smart contract functionality into the Verge network. Instead of creating a token of its own, RSK pegs a virtual smart token to the price of XVG. Users can freely move tokens between the two chains. The Verge Blackpaper claims that the smart contracts will be turing-complete and offer direct competition to Ethereum smart contracts. As RSK currently offers 400 transactions per second, it has the potential to increase the scalability of the Verge network, which is capable of 100 tx/sec. The Rootstock development team has a future goal of 2,000 tx/sec using Lumino technology. RSK is scheduled to be implemented in December 2018, with smart contract functionality coming online thereafter.
Coin/Token Use
Verge Currency actively encourages vendors in various industries to accept their coin for payment of goods and services. A list of vendors is maintained and frequently updated on their website. Verge Currency also provides vendors with information and resources on how they can incorporate acceptance of XVG into their existing payment structures. While some of Verge Currency’s partnerships and their methods of attaining those partnerships are questionable, it is a positive step forward towards overall adoption.
There are too many vendors to list, but a sample of the industries that currently accept the XVG coin as payment include chartered jet flights, VPN proxy services, clothing and undergarments, web hosting, Bitcoin gift cards, perfumes and fragrances, surfing equipment, hot sauces, and adult entertainment.
There are five algorithms currently able to mine XVG. They are Scrypt, X17, Lyra2rev2, Myr-groestl, and Blake2s. Digibyte was the original pioneer of multi-algorithm mining. Multiple algorithms result in greater decentralization among miners because many different mining rigs can participate in mining tokens. The Verge team also claims that multi-algorithm mining will better secure the network and lower the probability of a 51% attack. Verge transaction fees are currently 0.1 XVG, with transaction times varying from 5 to 10 seconds based on the load of the network. Transaction capacity is presently 100 transactions per second, with scalability increasing from the implementation of RSK to a potential of 2,000 transactions per second. The maximum supply of 16,500,000,000 XVG will be reached within 7–9 years from 2018.
The Team
Justin ‘Sunerok’ Valo
Justin is the founder and lead developer of the Verge Currency project. He claims six years in blockchain technology and over twenty years in network security. He lists his education background as the “Dongyang Internet Computer Academy,” of which little information can be found beyond a LinkedIn, a non-working website, and some contact information, such as a Korean Yahoo email address. Justin’s listed work experience includes network administrator of the Goldmin.es mining pool, which appears to no longer be active, and blockchain engineer at Crypto Fantasy Sports.
Stan Faas
Stan is a Senior Front-end Developer with Verge Currency. He has an educational background in Multimedia Design and has previous experience in web design and front-end development. He was a supporter and contributor on the Verge Currency GitHub and joined the team at the beginning of 2018 to help build their new website.
Han Lien
Director of Marketing and Business Development at Morale Agency and Marketing Advisor to the Verge Currency project. Han has a Master’s degree in Business Administration and has previous experience in the aerospace industry. His work at Verge Currency includes workflows and processes to set work standards for the project, business development of partnerships, and team productivity/efficiency.
Dini Klaassen
Dini is head of project management at Verge Currency. She has previous experience in project management with multiple firms and has also owned and operated her own business.
The team section of the Verge Currency website lists 23 individuals. No LinkedIn profiles are included or linked to the Verge Currency website. The Verge Currency company LinkedIn lists sixteen people in total. Almost all of them use internet handles or aliases as opposed to their real names. They claim this is to protect their privacy. This is understandable, but it also highlights the lack of formal structure or business experience around the project. There is little to no software engineering or development experience to be found. Verge Currency’s employee focus seems to be most active in the marketing of their project. Overall, the Verge Currency team could use more competent development experience, stronger mentor/advisory roles, and more formal leadership.
Competition
There is a great deal of competition within the space of privacy-focused digital assets. Highlighted here are a few coins/tokens that are focusing on privacy at the protocol level and who could be considered direct competitors to Verge Currency.
Monero
Monero is arguably the most privacy-centric cryptocurrency in the world today. Instead of giving users the choice of privacy, Monero mandates privacy-by-default in nearly every aspect. IP addresses, transaction amounts, sender addresses, and recipient addresses are not publicly viewable. However, bad actors in control of enough nodes may be able to discern the IP address that has broadcasted a transaction. To address this concern, Monero is actively developing Kovri, which is the integration of the I2P network into the Monero codebase.
Monero is fungible, as in a single Monero coin can be substituted for another. The sender, receiver, amount of coins in a transaction, and thus the purpose of the transaction is difficult if not impossible to determine. Users, vendors, or other entities cannot block or blacklist individual addresses or their coins. For these reasons, it is the preferred cryptocurrency on the darkweb. However, it is also for these reasons Monero has attracted the attention of law enforcement and government authorities.
Zcash
Zcash is a privacy-focused cryptocurrency based on the modification of the Zerocoin protocol, becoming the Zerocash protocol. Zcash is similar to XVG in that they use a public ledger with optional privacy features. Unlike Verge Currency, Zcash has a 20% pre-mine in the first four years.
Zcash has two address types depending on whether the user desires privacy. Transparent addresses (t-addr) are visible on the public blockchain as well as the amount transacted. Shielded addresses (z-addr) are not viewable on the public blockchain, but both sender and recipient must use a shielded address for the transaction amount to be obscured. Furthermore, shielded addresses are not supported by some wallets, so users should use a privacy-focused wallet. Transaction fees are publicly visible for all transactions, so when transacting privately, it is best to allow the wallet to set fees as opposed to setting fees manually. Zcash shielded transactions use zero-knowledge proofs, or zk-SNARKs, as cryptographic protection. Zero-knowledge proofs allow verification between parties without any interaction or exchange of information.
Zcash has gone the route of optional privacy in an attempt to stay compliant with KYC/AML laws. Like Verge Currency, they suffer from the same effect of splitting the herds. Because only a small fraction of Zcash users opt for shielded transactions, those transactions effectively stick out on the blockchain and become easier for authorities to use to build identity profiles. Zcash cannot claim true fungibility without further enhancing privacy for all users.
Dash & PIVX
Dash is a cryptocurrency focused on payments. Dash has privacy features as an option similar to Verge Currency. Dash’s main privacy feature is called PrivateSend. It is a modified coin-mixing service based on CoinJoin. CoinJoin allows decentralized mixing of coins within transactions. In this way, an external viewer cannot know which output belongs to which input. However, with Dash’s PrivateSend, mixing is done through masternodes. This presents a potential problem as masternodes controlled by bad actors can log inputs and outputs, putting users at risk. Furthermore, many of Dash’s masternodes are hosted on Cloud-hosting services, and if a government authority demanded access to those masternodes or their logs, Dash users could potentially be de-anonymized. Dash’s masternodes also weight consensus based on what is effectively wealth, so the wealthy get more votes. Due to this masternode mechanism, Dash is far more centralized than its competitors.
Pivx is a fork of Dash with a greater focus on privacy. PIVX uses a custom in-house version of the Zerocoin protocol. To spend anonymously, users convert their existing PIVX tokens into zPIV tokens and send them to any PIVX address. The receiver will receive standard PIVX tokens that show up on the blockchain as if they have just been created. They have no transaction history, and the sender remains anonymous. PIVX further promotes privacy by incentivizing users to convert their PIVX into zPIV, where they earn interest. This ensures there is always an ample supply of zPIV tokens for anonymous transactions. zPIV tokens are not associated with any address on a blockchain, ensuring they cannot be viewed or monitored.
ICO
Verge Currency did not have an ICO or pre-mine. Anyone who holds XVG, including the team, either mined or purchased their coins on exchanges. How Verge Currency came to exist is another confusing point of contention within the community. While it began in 2014 with the name DogeCoinDark, it is not a software fork of DogeCoin. The name was more of a tribute to the comical nature or meme that represented DogeCoin. In reality, Verge Currency is a software fork of Bitcoin and PeerCoin. The project’s codebase also contains code from a variety of other projects; however, this is not something to necessarily be concerned about. Verge Currency is an open-source project under the MIT license, and using code from other open-source projects under proper license is commonplace.
Points of Confidence
- Verge Currency has a large number of vendor partnerships and integrations of XVG payment acceptance. While some of these vendor partnerships are questionable, regarding the value they may add to either partner, it does reflect that the Verge team is serious about increasing overall adoption of their currency and cryptocurrency in general.
- The Verge team aggressively markets XVG, the features, updates, and plans of the coin. The team section of their website lists no less than nine individuals who all play some marketing role, be it digital media, advising, visual media, or recruiting.
Risks
- The Verge Team offers little verifiable information about its members. Only a few of those mentioned on the team page use real names. No LinkedIn profiles are directly provided on the team page. Of the team members listed, there is little development talent — many marketing, recruiters, and content creators but almost no development or software engineering experience.
- Verge is actively courting partnerships by paying large sums. They are also crowdfunding through their users to pay for these partnerships. The most recent example of this is the Pornhub partnership. While the Pornhub brand is massive and reputable, it is a business that relies almost entirely on ad revenue while serving up a free product. The amount of value brought to either party via XVG integration is questionable.
- Verge faces stiff competition from multiple other coins/tokens that focus on privacy. While other privacy-centric coins make privacy a core focus at the protocol level, Verge Currency’s “privacy by choice” raises the question of whether the coin can be private at all.
- Verge Currency lacks any formal structure or leadership. No actual company/foundation is backing the project nor was there a funding mechanism. Verge has asked for donations from their users to pay for future development and to reveal partnerships. This is not conducive to long-term project security or viability, and it also suggests a lack of business experience and acumen.
Conclusion
Privacy coins are a hot topic in the digital asset space right now. People value privacy as a fundamental human right, so there is clearly a desire for these coins. The pseudonymity provided initially by Bitcoin was one of the qualities that attracted people to it, but it did not take long for users and authorities to realize that Bitcoin is not private or anonymous. Verge Currency’s integration of TOR and I2P present interesting opportunities, but they are not without their pitfalls. When combined with Wraith Protocol, which is itself overhyped and falsely marketed, Verge Currency still does not provide users with real privacy.
Verge Currency is not fungible. Stealth addresses alone are not enough to obscure transaction inputs/outputs, nor do they properly hide the sender. This leaves the transactions open to be traceable. Furthermore, because Verge Currency uses a public ledger, they split their user base into those who want privacy and those who do not. This has the effect of narrowing down the herd size in which privacy-focused users can hide within. If only a handful of users are taking advantage of Verge Currency’s privacy features, it becomes far easier to identify those transactions, addresses, and ultimately the users themselves. Until these issues are addressed, some of Verge Currency’s claims to privacy are questionable if not outright marketing gimmicks.
None of Verge Currency’s features or technologies are unique or novel. What appears to have carried this project is the aggressive marketing, the questionable involvement of paid Twitter promotions, and the diehard fan base among its users. The truth is Verge Currency has no proper software development foundation. They have lauded their lack of a funding mechanism as something to be proud of when in reality they lack the funding and resources for proper, experienced development. The vendor integrations and partnerships won thus far bring little to no value to either party. The Pornhub partnership cost the XVG community nearly 6 million dollars to partner with a company that is in the business of giving a product away for free in return for ad-based revenue. The value of this partnership is non-existent beyond brand association. That the Verge team would ask their users to pay for this is bizarre and unprofessional.
Verge currency has many shortcomings. Privacy “as a choice” is, in fact, no privacy at all. Their team overall lacks experience and competency. This is reflected in their exploitable codebase, their handling of the exploits, and public responses to poor situations that could have been avoided as they arise. Until these shortcomings are addressed, Verge Currency is a project to be avoided.
Thanks again to ImperialShogun for writing this thorough report on Verge Currency!
News & Resources
Official Verge Currency Website
Verge Currency FAQ
Verge Currency Github
Verge Currency Roadmap
Verge Currency Blackpaper 3.0
Verge Blockchain
Verge Blockchain Download
Verge Blockchain Explorer
Mining Exploit
On April 4th, 2018 the Bitcointalk forum user ‘ocminer,’ owner and operator of Suprnova mining pools, created a thread on Bitcointalk warning people that the XVG network was being exploited via a vulnerability in the XVG codebase using the Scrypt mining algorithm. While the mining exploit was not a ‘51% attack,’ the results were effectively the same. Using spoofed timestamps, the attacker was able to control approximately 99% of hashing power on the XVG network. This resulted in the exploiter creating low difficulty blocks and mining 1,560 XVG per second, equivalent to about $78/second.
While the Verge Currency team claimed the attack lasted only thirteen hours, this is not true. The attack actually went on for several days. The first ‘fix’ only slowed the attacker down and created issues causing wallets to be unable to sync. The second ‘fix’ was incorrectly implemented and had to be pointed out by the same Bitcointalk user ocminer, the originator of the post alerting the community to the mining exploit.
XVG eventually had to be hard forked and wallets updated to halt the exploit. While the Verge team initially claimed 250,000 coins were mined via the exploit, ocminer posted some of his chat logs with the lead Verge Currency developer Justin ‘Sunerok’ Valo, who said the attacker had mined approximately 4,000,000 coins per day. Unofficial estimates of coins mined by the attacker during the exploit vary from ~15,000,000 to ~19,500,000. Furthermore, a Bitcointalk user ‘vitaminas,’ who previously claimed to be a high ranking member in the Verge Currency Discord server, said that the attacker mined ~43,600,000 XVG coins and 28,000 blocks.
During these events, the Verge team acted nonchalantly or as if the situation was not a situation to worry about. Considering that miners are the backbone of the network, this is puzzling as they were still consuming electricity while the blocks they were mining were being orphaned instead of rewarded. The lead developer Justin ‘Sunerok’ Valo also went on the offensive, blaming ocminer for making the situation worse by publicly exposing the exploit on Bitcointalk. However, ocminer had attempted to reach out to the Verge team on their Discord channel only to be ignored. During the exploit, the discussion was heavily censored on the Verge Telegram/subreddit, and users were outright banned for discussing or asking questions about the exploit. Between the bungled attempts to rectify the exploit within the XVG codebase, the team’s uncaring attitude toward their miners, and their poor handling and response to the situation, it is fair to question their competency.
On May 22nd, 2018 the Verge Currency network came under attack from an almost identical mining exploit. Once again the Bitcointalk user ocminer alerted the public that the attackers had used the same exploit of spoofing timestamps to create extremely low difficulty blocks, except this time they used both the Scrypt and Lyra2re mining algorithms. Approximately 35,000,000 XVG coins worth nearly $1,900,000 USD were mined in just three hours. The Verge Currency team claimed the problem was due to a DDoS attack on mining pools and has since remained silent.
McAfee Tweets
Verge Currency languished as a relatively obscure coin prior to December 13th, 2017 when John McAfee tweeted that privacy coins “such as XVG cannot lose.” Thus began the meteoric rise of XVG from $.01 to over $.20 in just ten days. It was later alleged McAfee was paid to promote the project via Twitter. McAfee later walked his previous promotional comments back and claimed he was hacked.
To thicken the plot, another Twitter user, who went by the handle XVGWhale, claimed McAfee was attempting to blackmail him and the Verge team. XVGWhale provided jumbled screenshots as his evidence, all of which McAfee allegedly denied. XVGWhale would go on to claim his original Twitter account was hacked. Though these events were widely reported on within the cryptocurrency community, verification is difficult. Tweets have been deleted, and accounts may no longer exist. Regardless, the situation suggests a clandestine attempt to lift an obscure altcoin via paid promotions from a celebrity-esque figure within the community. These are not the underpinnings of a sound project; instead, this is essentially pump and dump antics.
