Verge (XVG) just had a bizarre and spooky event, where the entire blockchain history and transactions record of ~200 days just disappeared and is nowhere to be found. This is the first time that a chain reorganization of this magnitude has happened to a top 100 cryptocurrency by marketcap. This is latest in a long troubled history of malfunctions and exploits for the Verge project, which gained prominence after famed celebrity John McAfee pitched it to his followers back in ’17.
According to Antoine Le Calvez, the Coinmetric’s Verge node can now only retrieve data back from July ’20 and is now missing approx 560,000 blocks. It means that the transaction records found in those blocks have disappeared and so have the user’s token holdings. The chain reorganization is an extremely serious event, which points to the fragility and insufficiently secure nature of a blockchain.
What’s a Chain Reorganization (Reorg)?
A chain reorganization is an event in blockchain technology where the nodes receives blocks that constitute the longest chain with higher number of blocks than the other chain. Due to the consensus forming nature of the blockchain technology, all nodes generally accept the longest chain and discard the shorter one. It generally happens, when two blocks are mined at the same time and later reconciliation happens by discarding the chain with the less blocks.
The above mentioned procedure is a common occurrence, due to the time difference between different nodes receiving the data. However, an attacker or a malicious entity can also do the same by controlling the 51% mining power of the network and starting to tamper with the transaction records and history of the blockchain. They can do so by filling the chain with empty blocks and allowing it to appear as the longest chain, so the nodes will accept it in favor of the legitimate one. It results in users losing their wallet balances and the attacker acquiring high number of tokens in an illicit manner. A double spend is also a possibility, where the same tokens can be spent twice.
What Happens To The Verge Now?
Verge nodes can actually reject the longest chain and render the attacker actions useless, this would return the transaction history and wallet balances to the same as before the attack happened. However, this isn’t without it’s consequences and user’s confidence in the project has been harmed beyond repair. The activity of the Verge networks has been disrupted and will likely take sometime to come back to normal. But, due to the hash-rate deficiency and GPU-mining based algorithm, the long term security of the network is under question.
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