VeChain (VET) is a blockchain platform that seeks to enhance supply chain management processes with specialized functions. It uses tamper-proof distributed ledger technology to determine the authenticity and quality of products purchased by platform users.
VeChain sees blockchain technology as an infrastructure through which business and industry can transfer and store data in a decentralized manner. Starting with logistics, other economic sectors should also be able to benefit from VeChain in real use cases.
A special feature is the Proof of Authority consensus mechanism, which has caused quite some buzz.
The VeChain Coin solves a problem that is very common in today’s era of globalization. More and more parcels are being sent and thus more and larger supply chains must be able to be traced. With the previous technology, companies have often reached their limits. This is exactly where VeChain comes in. The decentralized nature of distributed ledger technology ensures that the supply chain is completely transparent for all parties involved and that the supply chain remains unchanged. The primary goals are:
- To build a distributed ecosystem based on blockchain technology for transparent information flow, high-speed value transfer, and efficient collaboration.
- End users, retailers, and producers should be able to have a reliable source of truth without having to blindly trust each other.
- It aims to achieve secure supply chain management solutions through asset digitization.
In summary, Vechain aims to be the leading platform to deliver real economic and social value blockchain-based. The platform allows traders to assign a unique identifier to each of their products, making them transparent without having to rely on the sincerity of the parties involved in the supply chain.
Vechain is a public blockchain designed for companies of various sizes. The VeChainThor platform is the underlying technology of the ecosystem. The blockchain was developed to address current problems related to new types of governance and economic models.
In addition, Vechain offers innovative technical solutions, which are tailored to the actual needs of companies, individuals, and developers. In this way, it aims to drive the adoption of blockchain.
The public blockchain that derives its value from activities created by members within the ecosystem solving real world economic problems — Vechain.org
How Does It Work?
Every product that runs on the VeChainThor platform is assigned a unique and distinct identifier. The identifier, called VID, can be used to identify the product, allowing the ownership history to be tracked at any time.
It can be written in QR code, RFID tag, or Near Field Communication (NFC) tags. VID technology enables the integration of real assets into the VeChain platform. By using blockchain technology, the stored data cannot be changed. In addition, the recipient of the goods has the opportunity to verify the authenticity of the product, which is particularly relevant for luxury assets. The system, therefore, creates greater transparency and traceability.
With the help of the VET token, users can buy capacity in the system on the blockchain. The higher the number of VET owned, the higher the priority in the network. The second currency VTHO is used to pay for adding information to the blockchain. Details in the next section.
Technology
The system relies on proof-of-authority (PoA) consensus to enable an efficient network with the lowest possible energy consumption and to ensure the security of the blockchain.
The Proof-of-Authority consensus is a consensus algorithm that demands nodes to be authorized in order to participate in the blockchain consensus. Once authorized, nodes are given equal chances to publish new blocks and gain rewards. As a result, there is no need for nodes to spend vast amount of resources to compete with each other. In addition, richer nodes do not have more advantages than other nodes in the system. PoA is also an efficient consensus algorithm in terms of network bandwidth usage. It takes little time to decide block producers and thus, allows more time for transmitting transaction data. The system can, therefore, have a high throughput, or TPS (“Transactions Per Second”), within the range allowed by the underlying network. — VeChain Whitepaper
Transactions are permanently stored on the blockchain to prevent counterfeits (for example) from entering the market. The platform makes use of a 2-token model:
- VET acts as the main currency, which is also traded outside the platform and used on the platform for most transactions. Originally, VeChain’s native token was known as an ERC20 token with the ticker symbol VEN on Ethereum before VeChain developed its platform. After the release of the platform in 2018, the token was renamed VeChain Thor (VET). The supply of VET tokens in the market is set at a maximum of 86.7 billion VET, of which approximately 75% are currently in circulation.
- The second currency, VTHO, is used specifically to create smart contracts. The interaction of both tokens on the platform keeps transaction costs stable. VeThor, or Thor Power (VTHO), is automatically generated through the use or holding of VET tokens and allows access to supply chain technology on the blockchain. VTHO is thereby considered as a driver for new currencies and smart contract transactions on the network and funds projects on the VeChain blockchain.
Users can provide VET to the network during staking to validate transactions and thus receive VTHOR as a reward.
Links to other blockchain projects can be established via the VeChain mainnet and an individual coin can be launched on the VeChain network. This is facilitated by a software development kit (SDK) called VeChain ToolChain to develop new dApps on the blockchain.
New currencies joining the blockchain will follow the VIP180 standard, which is specifically designed for the network — similar to the ERC20 tokens on the Ethereum blockchain. For example, companies that use VeChain’s tracking in their supply chain must pay with VTHO to add information to the blockchain. The respective VTHO tokens are then burnt.
The unique two-token system (VET+VTHO) significantly helps separate the cost of using blockchain from market speculation. Due to the correlation with the blockchain resource utilization, the cost is more predictable with the monitoring of the VTHO supply and demand. In addition, Foundation’s governance mechanism further stabilizes the cost. — Vechain.org
Founded in 2015 in the city-state of Singapore, the platform was conceived by its developers as a way to create greater market transparency and provide consumers with more detailed information about the products they buy.
The creator and co-founder of the project is Sunny Lu, the former CIO of Louis Vuitton China. With the project, the developers in the project want to draw attention to the fact that the capabilities of blockchain technology create transparency that does not depend on mutual trust between users. With the help of technology, structures are created that cannot be manipulated as part of a supply chain of goods.
Driven by the will to develop new loT (Internet of Things) applications for supply chain management, Sunny Lu is considered one of the creative minds behind the network, which is managed by the non-profit organization VeChain Foundation. Today, the team consists of more than 100 employees who offer blockchain-as-a-service (BaaS) products to their customers worldwide to optimize logistics operations.
VeChain can already score with some great partnerships. One of the biggest partners is PricewaterhouseCooper (PWC). VeChain and PWC want to offer third-party services to participants on the decentralized platforms. Together with PWC, they are rapidly expanding VeChain’s network and strengthening the value of the platform with each new member.
Also, they have officially confirmed a deal with BMW. BMW hopes this collaboration will eliminate child labor in its supply chain.
Renault is also working with VeChain to capture meter reading from the car on the blockchain. Until now, a popular method when selling a car has been to lower the meter reading. These scams will be rendered impossible by Renault and VeChain’s collaboration. Furthermore, the luxury fashion label Givenchy, as well as state authorities of China are among VeChain’s partners.
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Vechain is one of the few projects in the crypto market that have a real and actual use case. The goal is to create a platform to revolutionize the supply chain as it has been known until now. In the traditional supply chain, relationships between suppliers, manufacturers, and distributors are based almost entirely on trust. Constant monitoring is possible in very few cases.
By using transparent technologies without weak points or manual control units, Vechain provides the opportunity for trust-free automation of the supply chain. At the same time, costs are reduced and security is increased. This means, for example, that food manufacturers can track their entire logistics processes from the producer of the raw products to the end consumer. This not only creates transparency within their own company but also increases the trust of customers and suppliers. The application will also simplify the tracking of individual products. In addition, smart contracts offer the ability to trigger actions and transactions automatically. According to the if-then principle, processes can be executed according to conditions. VeChain focuses entirely on optimizing supply chains and tracking goods as well as data. This makes the project particularly exciting and unique in its category.
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