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83. What is Verge and should you get in? (Published: 22nd Dec, 2017)
In the past week, a cryptocurrency has grown almost 10x and caught everybody’s attention. This cryptocurrency is called Verge. It was hanging around 50–100 in market capitalization during most of the year but recently spiked up to top 20.

The technology
Anonymous currencies become the superstar of cryptocurrency in 2017 as more and more Bitcoin addresses being blacklisted or whitelisted. It is a foreseeable future that one day, the freshly mined bitcoin will be more valuable. To keep a cryptocurrency fungible, and for various other reasons, anonymity has really become one of the most demanding features these days. Verge obvious falls into these category as they promoted on their homepage‘Verge is a secure and anonymous cryptocurrency, built with a focus on privacy.’

Firstly, it is proof of work. Which means it holds all the scaling issue with proof of work currently. It can go through more transactions than bitcoin because it has a block time of 30 seconds. Also, it enables 5 different algorithms to find the next block which can be something interesting. It promises to integrate second layer scaling solution called RSK which was designed for bitcoin. In conclusion, it does not have much difference with bitcoin in terms of consensus protocol other than mining algorithm.

Secondly, it was documented in the ‘blackpaper’ that it utilizes Tor and I2P to achieve anonymity. This is not very promising because Tor and I2P exsited for a long time and they are used to hide user’s IP addresses. However, even for bitcoin, IP address is not recorded on the blockchain and therefore not easily tractable. Not to mention that you can use Tor and I2P protocol to send bitcoin transaction also. Therefore, this cannot be counted as the feature of an anonymous coin.

What needs to be anonymous is the address of the sender and receiver of a transaction. Dash achieves this by merging multiple senders in a transaction and Monera uses sophisticated ring signature structure. From the transaction history of Verge block explore, we cannot see any of the above features. All the senders and receivers are very clearly observable and they even provide a rich list of all addresses.

Decentralization index
Now, for a cryptocurrency on an open blockchain to be meaningful, it must be decentralized. There are many parameters that we can use to quantify decentralizeness. Those can be the distribution of currency, the number of nodes and the distribution of mining reward etc. Also, we would like to argue that the decentralizeness test is one of the most fundamental test that we can use to value a cryptocurrency.

Firstly, it is a big plus to even be measurable in term of decentralizeness. Most ERC20 token that does not have a working system such as Tron and Qtum cannot be measured because you need to trust the developing team to fulfill the promise they have delivered. Hence those are centralized for now. Verge, on the other hand has a working protocol and has been traded for years.

However, comparing to other established PoW cryptocurrencies, it is simply not comparable. It has only 8 live nodes (which means new coins will be distributed among these 8 nodes) and top 10 holders holds more than 40% of the coin. Also, as a cryptocurrency of only 3 years old, almost 90% of the coins has been mined. As a result, to go as widely accepted as Bitcoin or Ethereum, it still has a long way to go.

Recent updates
Basically, what has heavily driven Verge’s price is one tweet that John Macfee tweeted on Dec 13th that he listed 3 anonymous coins that he saw great future in. Then the news was reported all over the place in the next few days and that was exactly when the price of Verge starts to pump. Also, Verge has been announcing collaboration with vendors frequently in the past few month. Most of these announcements can be found on their twitter.

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