Despite cryptocurrencies and blockchains being famed for decentralization, developments in crypto mining have been pushing them toward a more centralized model. This issue was particularly thrust into the spotlight in May 2021, when Tesla’s Elon Musk argued on Twitter that “Bitcoin is actually highly centralized.” To back his claim, he cited the flooding of a hashing (or mining) company in China and the subsequent 35% drop in Bitcoin’s (BTC) hashing rate. This hashing company was able to have such a large mining dominance because it used application-specific integrated circuits (ASICs), which unlike other mining methods, are built specifically for mining. Large companies invest in tens of thousands of ASICs to increase their profit, meaning that mining becomes centralized in the hands of large mining companies and ASIC manufacturers. To counter this, developers have been launching new ASIC-resistant algorithms, such as CryptoNight, and ASIC-resistant coins, such as Vertcoin (VTC).
What Is Vertcoin (VTC)?
Vertcoin is an open source, decentralized, digital currency that can be transferred peer-to-peer (P2P) across the Internet. As with most cryptocurrencies, it cuts out the middlemen, allowing users to fully control their money and track their transactions in a transparent manner. Vertcoin has also done away with chargebacks, making it a viable payment solution that its users can trust.
Vertcoin was created in January 2014 with the purpose to create a coin that upheld cryptocurrency’s original vision: “a financial system owned and run by its users.” Upon seeing that Litecoin had fallen to ASIC mining dominance, developers carried out a soft fork from Bitcoin (BTC), thereby creating Vertcoin (VTC). This new cryptocurrency enabled GPU mining, which can be carried out from a personal computer or laptop, and halted ASIC mining. This meant that instead of huge hashing farms centralizing the system and making huge profits, individual users could help run the coin and make their own, albeit smaller, profit.
Vertcoin aims to give users control of their money in a fully decentralized manner by being a truly ASIC-resistant cryptocurrency. Until now, ASIC-resistant coins and algorithms have failed as ASIC manufacturers simply build circuits to target them, making it impossible for them to escape. However, Vertcoin has promised to hard fork every time ASICs are able to start mining VTC. This means that it would not be financially rewarding for ASIC miners to try and target VTC since the machines are expensive to build and would stop working after the hard fork, meaning very little profit, or a loss. This system makes Vertcoin one of the most ASIC-resistant coins on the market.
Why Does Vertcoin Want to Be ASIC-Resistant?
To understand why Vertcoin combats ASIC mining, an understanding of the different mining types is needed. In the early days of cryptocurrency, Bitcoin (BTC) was mined on individual home computers using CPUs, meaning shared opportunities.
- Central Processing Units (CPUs):This simple form of crypto mining can be carried out using a home computer or mobile phone. CPU mining increases accessibility but profits are low as it cannot compete with more powerful equipment. Later, as crypto became increasingly lucrative, units with faster computations, and thus higher ability to earn rewards, were developed. These required a bigger investment, but profitability was higher:
- Graphics Processing Units (GPUs):This option requires a graphics card. It means higher initial costs but better efficiency while still being usable at home.
- Application-Specific Integrated Circuits (ASICs):These circuits are specifically built for mining and can target specific coins. They require large amounts of energy but due to their efficiency, can be very profitable.
Increased mining ability led to more powerful units dominating the market. Miners with more money bought up more machines and increased their dominance, which ultimately threatened decentralization. Vertcoin aims to return crypto to Bitcoin founder Satoshi Nakamoto’s vision of a decentralized currency run by its users.
How Is Vertcoin Structured?
- Lyra2 v3:To bring Vertcoin back to the initial goal — “a financial system owned and run by its users,” Vertcoin’s developers use a password hashing scheme (PHS) known as Lyra2. By being strictly sequential, Lyra2 is not easily parallelizable and thus provides stronger security against attackers with multiple processing cores, including powerful GPUs and custom hardware such as ASICs.
- Proof of Work (PoW) consensus algorithm:Despite being ASIC-resistant, Vertcoin still operates under a PoW consensus protocol, meaning that the blocks of verified transactions are created through mining. This means users can mine VTC at home, allowing them to make a profit and run the currency.
- VTC One-Click miner (OCM) program:To make mining as accessible as possible, Vertcoin has created a simple and easy-to-use mining program that anyone with a home computer or laptop can use. However, mining VTC is not a get-rich-quick Vertcoin aims for true decentralization, encouraging as many participants as possible. Thus, encouraging a small number of users to earn big profits would be counterproductive.
- Vertcoin (VTC):VTC is the main product, a P2P digital currency. Like Bitcoin, it works solely as a digital currency and does not function as a token with multiple functions for running the network.
How Profitable Is Mining Vertcoin?
Anyone can mine VTC; however, profitability will vary depending on a variety of factors. Thankfully, it is easy to calculate how profitable it will be before beginning to mine. By inputting information into whattomine’s mining calculator, the inbuilt formula can estimate how much VTC, or equivalent fiat currency, will be made within a certain space of time.
To calculate VTC mining profitability, a user must input:
- Their hash rate in KH/s:This is calculated by multiplying the hash rate in MH/s by 1000.
- Their power consumption in watts:This can be measured either through an online calculator, or an energy consumption monitor.
- Electricity costs in your currency per kWh:It is not all about money in, with money out also being a factor for profit calculation. This can be checked on an electricity bill.
How To Mine Vertcoin?
By using the OCM program, anyone with a laptop or home computer can mine VTC. To start mining, there are a few steps that must be taken first:
- Check graphics card requirements: Before starting to mine, prospective miners should check that they have the necessary capabilities. These include a graphics card that is an AMD GPU GCN 1.0 or higher, has a minimum of 2GB VRAM, and a compute capability of 3.0 or higher. Full specifics can be found on GitHub.
- Ensure graphics card is up to date: If the graphics card is out of date, it could cause issues when mining, making it slower and thus less profitable.
- Download OCM program: To mine, the user must first install the required software from the project’s GitHub page. It is important to download the latest version to ensure maximum efficiency and to keep up with any forks that Vertcoin makes.
- Make a password: Once the program is saved onto the desktop, click it once (“One-Click”) and make a password. This is important as it will be needed to sign in and withdraw assets.
- Start mining: A user can now start mining and will be shown exactly how much VTC is being mined at any given moment, as well as how much VTC has already been made. How much is made in one minute will depend on the power of the miner’s graphics card. In addition, if the user wants to turn off their personal computer or laptop, they should stop the VTC mining process and restart it when they restart the computer.
- Storing VTC: Once VTC is mined, it will be automatically stored in the inbuilt VTC wallet. However, should a user wish to send their VTC elsewhere, they can do so easily by clicking “send coins” and inputting the destination address and previously established password. When sending coins to another wallet, a factor to consider is the fees. Every time coins are grouped together, they require more space on the block, which can incur higher fees.
Who Is Behind Vertcoin?
As an open-source project, anyone can make changes to Vertcoin if their changes are approved by a developer. Currently, Vertcoin is maintained by a team of six developers, the leader of whom is James Lovejoy, a graduate student at MIT’s Digital Currency Initiative. Though young, these developers are high achievers with lots of expertise and a team around them with lots of experience; MIT’s Digital Currency Initiative is also responsible for Bitcoin’s Lightning Network.
Vertcoin Price Analysis
Launched in 2014, VTC, like most early cryptocurrencies, did not truly surge in value until the bull market of 2018. Unfortunately, as with the other cryptos again, it also came crashing down with the 2018 crypto crash. This was further exacerbated by four cyber attacks in October 2018; however, although these attacks resulted in some losses, they also led to increased security.
These improvements by Vertcoin were able to maintain confidence in the coin and no huge drop in value was reported, as can be seen in the price chart below. However, with the climate of distrust following the collapse of many altcoins and the rapid decline of BTC, VTC did continue in a general downward trend.
Its price has been relatively stable since 2019, with a slight increase in value following the Verthash hard fork in January 2021. The hard fork brought with it increased security and updates, taking VTC from $0.16 in January to $1.98 in April 2021. However, VTC has once again decreased in value, standing at $0.46 today with a relatively small market cap of $29.3 million.
As Vertcoin becomes more secure and stable, it could see its value increase. However, judging by the relative stability of its price for so long, as well as the short and limited increase in value following its hard fork, it seems unlikely that VTC will see a surge in value. Having said that, being the most ASIC-resistant coin on the market will mean that those investors wanting to support crypto’s original purpose will go to VTC. In addition, its circulating supply is currently 74% of its max supply of 84 million coins, meaning that the limited coins left may push up its value, should there be enough interest.
Vertcoin shows no sign of going to the moon, but it is a resilient coin that keeps improving and it will appeal to all crypto purists. Its offering is a noble one and if it can gather interest, VTC’s value may rise.