Coin Review - Verge (XVG)

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Current price: $0.07

Current supply: 14.9bn

Maximum supply: 16.6bn

 

What is it

Verge is a cryptocurrency token that is focused on providing its users with greater privacy and fungibility when compared with Bitcoin. Verge operates on its own blockchain and processes transactions every 30 seconds (compared with 10 minutes on the Bitcoin Network) through 5 Proof of Work (POW) algorithms. Verge is the first crypto asset to provide users with the optionality to transact on a public or private (anonymous transactions) blockchain.
 

What problem is it solving

Verge aims to add user privacy to the network through implementing a layer of anonymity at the point where a user connects to the network. Generally speaking, when messages are sent between internet users, an Internet Service Provider (ISP), can see the IP address of the sender and receiver. ISP’s can learn a lot about both sender and receiver and also have knowledge of where messages are being sent from and too. This can cause multiple anonymity and privacy issues. Verge uses three solutions for solving this problem:

 

1.    ToR– The Onion Router (ToR) is a well-known and widely used anonymity scheme for IP addresses where the network randomly routes messages through multiple computers on the Tor peer-to-peer network before they exits and arrives at their destination. This prevents ISP providers being the centralized intermediary that hold all information from your IP address. It also prevents websites knowing who visited their page as they will only see the IP address of the exit node. Even the computers that the relay messages on the Tor network do not know what they are sending as all messages are encrypted. TOR is standard for transactions on the Verge network, making it difficult for websites and services to identify the source and destination of transactions.

 

2.    I2P– The Invisible Internet Protocol (I2P) allows for censorship resistant, peer-to-peer communication. It provides anonymity through encrypting the sender’s traffic and randomly routing it through a global peer-to-peer network of computers. Verge uses I2P’s latest networking technology to anonymise all XVG data being sent over the network i.e. sending a transaction.

 

3.    Wraith– The wraith protocol allows users to transact on either the public or private blockchain, whilst staying anonymous in both scenarios. Transactions on the public blockchain provide n and speed for XVG transactions, whereas transactions on the private blockchain wouldn’t be publically visible at all. Private transactions would use stealth addresses routed through Tor. Stealth addresses are used to send funds to one time use addresses that cannot be traced to the ‘core’ wallet address.
 

Why do we like it

  • First privacy coin to hide IP addresses

  • Dual private / public blockchain optionality for users

  • Partnership with Pornhub who, for now, will exclusively accept cryptocurreny payments in XVG (Verge)

  • Strong community (recently raised US$3m through a community fundraise)

  • Partnership with TokenPay to develop a Verge debit card

  • Multi algorithm support (5 POW algorithms) increase security of the blockchain and make a network attack significantly more difficult

  • Low transaction fee (0.1 XVG = <$0.01 at today’s price)

 

Why do we not like it

  • No pool of funds to incentivise Verge developers to continue improving the network

  • Developer team have a record of missing upgrades and sourcing code from other projects

  • Vulnerabilities in Verge code have been previously identified

  • Track record of poorly promoting network improvements and upgrades

  • Recent vulnerability found in its codebase which resulted in empty blocks being mined in order to collect the ‘block reward’

  • Verge has previously been the subject of multiple market ‘pump and dumps’. The instigators have ranged from the key developers through to celebrity twitter influencers like John McAfee


Final Verdict

Verge is vying for the title of ‘best privacy coin’, a highly competitive market with established big players like of Monero and ZCash. Our primary concerns are around the team and their incentives, the lack of governance and quality checks for development and the unprofessional promotion of future announcements. Whilst Verge has a few key differentiators that could make Verge appealing, based on their track record to date we are unsure they will be able to leverage these and deliver the privacy project of choice for crypto.

Further, Governments are only just trying to determine how crypto assets will fit within their economies and privacy coins create another headache in that they can be untraceable by all parties. One of Government’s biggest gripes with crypto has been monitoring both ethical and non-ethical use, privacy coins only add to the complexity. Long term, this could hinder the adoption of coins like Verge.

Magnet Capital does not accept any liability for any financial decisions made on the basis of the information provided. The above opinion does not constitute financial advice and should not be taken as such. Magnet Capital urges you to obtain professional advice before considering any investment decisions.

 

Egor Sidelska