The latest Verge XVG fiasco. What is going on?
by MinerGate Mining Pool April, 24, 2018
Hackers have always attempted to manipulate and steal cryptocurrencies from the very beginning. It isn’t anything new and honestly is to be expected with something so novel and valuable. The really beautiful thing about blockchain technology – the easiest thing to understand about it – is that it is practically impossible to hack. Take Bitcoin BTC for instance – many have tried and just as many have failed when it comes to making changes to the ledger. It is a monumental task that would require time and power consumption on a scale such that legitimate mining would actually be more profitable than theft.
Where tech-savvy thieves have had success is on the user end. Individuals and even major companies have fallen prey to attacks that have left them all but empty-handed and scratching their heads. This is due to poor storage of coins or a general lack of security in the first place and is relatively easy for a skilled hacker. However, the only way possible to change a blockchain itself would be to gain majority control of the distributed network – and that is exactly what happened to Verge XVG on April 4th.
How was the Verge Blockchain was hacked?
Verge is a proof-of-work currency focused on privacy that derives its security from the decentralization of its network. If a single actor were able to gain majority control of this network, then they would be able to create and modify the blockchain at will. Unfortunately, one such person was able to pull that off in a 51% attack on the XVG network. It turns out that Verge’s code contained multiple minor exploits that, when compounded, allowed a hacker to manipulate the hash rate and forced the system to issue a large sum of XVG mining rewards from thousands of blocks seconds apart from each other. The development team claims that 250,000 XVG was stolen during the attack, however, there is speculation that as much as 3.9 million or more may have actually gone missing.
It is important to point out that the Verge team is not strangers to controversy. From allegedly paying over $100,000 to tech guru’s to pump their coin to lack of transparency and communications over promised updates they have had a lot of dirt thrown their way. It would seem that it is not all completely unwarranted. The project, while full of potential, has been very poorly managed along the way, which is reflected most prominently in this latest attack. The vulnerabilities in Verge’s code should have been caught before release, but what’s worse is that even after claiming to have solved the issue, users were able to still find the exploits present.
The future for XVG?
There is no question that Verge, like Monero XMR and Zcash ZEC, are going to have a very strong place among the sea of less private crypto coins. That being said, many miners and investors have turned their backs on Verge due to a lack of confidence and trust in the development team. Weeks ago, red flags were already raised when the project lost control of its Twitter account to hackers and recent events have not restored much faith for a growing number of individuals. Details around the recent attack are hazy at best as information from community members and project leaders seem to conflict at every turn. It is unclear, for example, whether the attack lasted around 13 hours or only 3 as claimed by the lead developer, Justin Sunerok. He also consistently underplayed the attack and even made erroneous or misleading comments over social media and popular forums.
The team was able to finally implement a solution that they were satisfied with but apparently were unaware that they had forked the coin by doing so. The fact was brought to their attention later by a Bitcointalk member called “Ocminer” who noticed while examining the code and even though the developers have since claimed the fork was intentional it remains unclear whether or not they fully understand the consequences it may have had. When a blockchain forks, a permanent divergence is created in the blockchain. A hard-fork has the potential to damage the security of the network by reducing the number of participating nodes during the switch. It may be simple incompetence or it may be something worse, but unless some serious changes are made to the team’s operations or the team members themselves then this coin may suffer in the long run. The crypto community at large seems torn over the fate of Verge. Some believe that the coin will come back stronger than before (which there is actually evidence for below) while others believe the whole thing may have been a scam from the beginning.
Quick Recovery or market manipulation?
It is worth noting that excitement does seem to be building around XVG again as it did recover well from the overall dip in the cryptocurrency market recently and it likewise seems to have made an outstanding recovery in the face of this last attack. Over the days since the attack, it has made over 100% in gains, jumping from $0.043 up to $0.089 against the dollar USD. There are a few things that may have caused this. One is the possibility that a large amount of freshly mined coins and transactions during the attack may have temporarily spiked the price. Another, a more likely possibility is that the price is rising as investors anticipate an upcoming partnership announced by Verge. The potential partner has not been named as yet, and not surprisingly is the subject of yet another controversial matter with the problem-riddled development team. After a recent $3 million crowd-funding attempt by the Verge team citing the partnership as the focus of the funds, community members raised concerns over whether the partnership was real or if the money is being used to pay tax debts.
It is highly recommended that you weigh the potential risks associated with mining this currency and proceed with caution. In the meantime, there are a whole host of other currencies available for mining at MinerGate.com. MinerGate is always keeping up to date on this and many other relevant stories in the cryptocurrency space. MinerGate strives to offer its users the best and safest experience for mining cryptocurrencies. In light of the recent attack on Verge, some exchanges have disabled deposits for XVG and currently, it is no longer supported on MinerGate. We will stay informed on the situation and may offer XVG in the future if satisfactory developments have been made to security and safety of their users is guaranteed. We will update you as information comes available. Thank you for being with us!