As mentioned earlier, Verge was introduced as a solution to Bitcoin’s lack of privacy.
To better understand how Verge works, it’s better to compare it to how Bitcoin works.
To send bitcoin, you need to be connected to the internet. While connected to the Internet, your Internet Service Provider (ISP) contacts the Bitcoin blockchain and in doing so displays certain information about you – one of which is your location.
This information can be intercepted by anyone who knows how the internet works and your privacy will be lost in the process.
However, the Verge blockchain uses two methods to ensure that your IP address is not traceable when using their blockchain.
The first method is that TOR (The Onion Network).
TOR acts as an intermediary between your ISP and the Verge blockchain.
It uses multiple servers to hide your location by changing the IP address your ISP sends to the Verge network.
This way, your real location cannot be accessed.
The second method uses something like called I2P (The Invisible Internet Project).
I2P is pretty similar to TOR, but more efficient in that I2P uses single paths as opposed to TOR which uses a single path.
It’s like sending a text message to someone with different phone numbers, with each phone number containing a different part of the message.
Verge also published the Wraith Protocol in January 2018.
While Monero Verge addresses are used for all transactions. Verge users can choose to have transparent transactions in the public ledger or enable the Wraith protocol and do transactions in the private ledger.
For example, if Mr A sends money to Mr B in a public ledger, the transaction will look like this:
Mr. A’s address sent 1000 XVG to Mr. B’s address and anyone can view this transaction.
But this is what the transaction looks like when the Wraith protocol is on:
xxxxx sent 1000 XVG to xxxxx and no one will know the addresses involved.
Below is a graphic explanation:
This is how XVG technology works. I’ll discuss how the Verge (XVG) is mined in the next section.