In the late second half of 2018, ASICs were made available for Vertcoin’s algorithm, Lyra2REv2. Due to the centralizing influence of these asics, a majority of network hashrate was collected by renting them to execute various majority hashrate attacks on the network. In response, the developers for Vertcoin have committed a hard fork using an updated hashing algorithm in order to protect the network. All users of the network must upgrade their software. (link)
Why change the algorithm?
Vertcoin is based on the vision that ASIC resistant mining is the only way to maintain a decentralized network where both consensus and economic incentives are managed at the level of the user. The ASICs that were created for Vertcoins algorithm endangered this vision, which led to the fork towards a different algorithm.
Even before the threat of ASICs, Vertcoin developers have been working on a new algorithm called Verthash (Read here to find out more about it). However, before Verthash could be completed, ASICs arrived and offered large amounts of hashrate for rent. This threatened Vertcoin’s network integrity and in response, developers decided it would be beneficial to tweak the existing algorithm in order to provide a short-term solution. This is mainly to protect exchanges and to return mining viability to GPU miners.
What algorithm was Vertcoin on, and what is the new one?
Vertcoin uses a hashing algorithm known as Lyra2REv2 which was developed by Vertcoin developers in 2015 with the idea that certain parameters could be changed to render existing ASICs useless. This algorithm was also used by several cryptocurrencies (Mona, Verge) due to its GPU friendly/ASIC resistant properties.
However, with the new ASICs Lyra2REv2 has effectively been taken over and Vertcoin’s fight against ASICs continues with Lyra2REv3.
What is Lyra2REv3?
Lyra2REv3 is a modifaction to the Lyra2REv2 algorithm. It differs from v2 in a few major ways.
- The methodology for random row selection for v3 differs from v2.
- Reduced Efficiency Algorithm Set and Order Changes
Lyra2REv2 Algorithm Set and Order:
Blake → Keccak → Cubehash → Lyra2 → Skein → Cubehash → BMW
Lyra2REv3 Algorithm Set and Order:
Blake → Lyra2mod → Cubehash → Lyra2mod → BMW
- Render ASICs useless
- Reduce inherent advantages of ASICs/FPGAs over GPUs
- Enable hard forking in a fast, yet safe and secure way
When is the fork?
The hard fork is planned to take place at block 1080000. With the Vertcoin block time being 2.5 minutes, that places the fork date somewhere around the second of February (02–02–2019). A friendly community member has created a site for us to countdown the fork: https://wenvtcfork.xyz/.
What do users need to do?
All users of the Vertcoin network, including exchanges, wallet providers, system integrators and payment providers need to update their wallets to the latest release which can be found here: (Vertcoin Core V0.14.0)
What are the future plans for Vertcoin?
Without a doubt – the fight against ASIC continues.
After the immediate ASIC threat has been alleviated, the developers can then resume their focus on building Verthash, an algorithm that’s both resistant to ASICs and hashrate outsourcing.
Tl;dr – ASICs have been made for Vertcoin and the threat is immediate. Vertcoin is forking to new algorithm, and have plans to resist hashrate outsourcing in the future in addition to scaling using the Lightning Network.
December 51% attack on Vertcoin
On the second of December 2018, a double spend attack was performed on Vertcoin. A large amount of ASIC hashrate was rented anonymously through rental services to attack the 4 year old blockchain. Things took an interesting turn, as it looks that Coinbase publically commented on the events, while dealing a blow to its competition such as Binance and Bittrex.
The Vertcoin blockchain experienced a series of successive reorganizations of the blockchain. On first sight, the attacks seem to be directed towards exchanges with the goal of stealing money, as if often the case with such attacks. However, given the relatively low volume on the Vertcoin trading pairs and the financial and legal risks that are associated with such attacks, it is highly unlikely that the attacks were initiated for financial gain.