How to respond to a tough referee report?

The main problem with this as a review is not the brevity or harshness (neither one of which is necessarily inappropriate) but failure to adequately explain/justify their objection to your work.

A good review should give objections/criticisms that stand on their own. References should be used to support the reviewer's points, not given in lieu of any explanation.

In addition, it seems that it is also not obvious how the reference relates to your work.

Make the focus of your response not this reviewer is wrong but I don't understand this reviewer's point. Explain why your work is different from that discussed in the reference and why you think the objections don't apply, and thus it is not clear to you why the reviewer objects.

In addition, you ought to ask the editor what they have in mind by major revisions. The "major revisions" response sounds like it was halfway between the responses of the two reviewers. But that doesn't mean it is a coherent synthesis of their positions. It doesn't seem there are any changes that would satisfy the second reviewer (indeed, they have pre-announced that). So what does the editor expect you to do with this request? I would seek clarification on this.

It may well be that the difficult reviewer will not have their way in the end (the fact that the paper was not rejected by the editor as they requested suggests this). So you may be able to simply add some more supporting text for your approach, have their inevitable reject decision overridden by the editor, and be fine.

How you reply is going to be largely determined by what's in the paper mentioned in the "described in xxx" reference. Step one is to read that paper, and understand it. Then read every paper that cites that paper. Then, maybe talk to some people in your area about the criticism and see what they offer. You're trying to refute a referee who flat out says you're wrong. You absolutely need to do due diligence so you can hold your own.

After doing this work, you might even agree with the reviewer. If this is the case, you go into salvage mode:

In the original submission, I said A, B, and C. The review pointed out flaw X. Given this, A no longer holds, but B and C are still true.

If, after doing your homework, you still disagree with the second reviewer, the response to that reviewer should take the form of

I don't believe the second reviewer's criticism applies, because.... In the original paper, this wasn't as clear as it should have been, and this is how I've clarified this point in my resubmission.

If the paper is still turned down, if you think the paper is VERY important, and that the literature would truly suffer without publication, sometimes editors can be persuaded to send it out for a third review if there is a major disagreement between reviewers. This is more likely to happen if the first review is clearly and overwhelmingly positive, and not "on the whole" positive. Don't go to this well for borderline cases, and certainly don't do it too often-- it's a once or twice in a career thing.

First of all, take this into account that you must provide answers to all concerns of all reviewers so that they become satisfied with your manuscript.

Since you feel that your manuscripts' results are reasonable and do not contradict with references provided by the reviewer, I suggest you to politely describe your results for the reviewer and compare them with that of the references. Tell the reviewer why the results are not in contradiction with previous works.

Moreover, consider that the reviewer has not stated anything about the results. His/her critics are about the methodology.

All in all, be very polite when answering the reviewers.