What Is VeChain (VET)

What is VeChain


Every year, counterfeit goods amount to trillions of dollars in global revenue. China is responsible for 80% of the fake products that are sold all over the world. Sadly, it doesn't stop at fake Rolexes sold online for $100. It has spread even to the pharmaceutical sector, and it's only getting worse.

Over the past few months, we’ve seen the Chinese government not crackdown on the production of counterfeit goods, but rather publicly cracking down on several cryptocurrencies and major blockchain projects. Ironically, projects such as Vechain keep popping out of the country.

Developed by the non-profit Vechain Foundation, the Vechain protocol is dedicated to delivering secure, stable, and scalable public blockchain solutions for global business. Let's take a closer look at the project, which is hellbent on eradicating counterfeit goods, and consequently saving trillions of dollars in losses and possibly lives.

Who founded VeChain?

Sunny Lu (@sunshinelu24), a Chinese entrepreneur, founded the Singapore-incorporated Vechain Foundation in 2015 alongside a team of developers. They first built it on the Ethereum blockchain in 2017 and sold 1 billion Vechain tokens to raise $20 million.

Sunny is passionate about including “old businesses” in blockchain because he believes these enterprises will play a key role in driving institutional adoption.

VeChain is a blockchain-based business enterprise platform designed to enhance supply chain management processes. It believes its range of services will deliver next-generation commerce experiences.

Existing VeChain Enterprise-Level Partnerships

The VeChain foundation has made it abundantly clear that they are not competing with Bitcoin or other blockchain solutions that seek to redefine how we spend, invest, and manage our money. They are solely dedicated to facilitating digital collaboration among businesses by providing new tools for efficient data transfer and supply-chain management.

Consequently, Vechain has succeeded in carving a unique niche for itself, hence gaining adoption from major financial institutions like pWC, Bitocean, and China-based Fanghuwang. Automotive and transport brands such as BMW, BYD, and DB Schenker, and the famous luxury brand Louis Vuitton, as well as Walmart China are already on board.

Pharmaceutical companies are not being left out, with brands such as Bayer China enlisting VeChain to trace drugs in their supply chain.

How VeChain Uses Blockchain Technology to Innovate Across Industries

Vechain offers a chip that is part of what’s being called the “VeChain Identity Technology Solution.” This chip is used to track luxury goods, manage the supply chain, and rid businesses of the plague of counterfeit products, oftentimes, made in China.To illustrate how this might help businesses, pharmaceutical companies are able to use these chips to store critical information about the status of a drug, including how it has been made, where it was manufactured, and when it expires. 

How Does VeChain Work?

VeChain has improved with three different iterations to date. V1 was Vechain's first blockchain attempt, but it was abandoned as it was no longer relevant to the Vechain vision. The platform was experimenting with NFT’s, or non-fungible tokens, on the V2 chain. This version has also since been retired in favor of V3, which allows Vechain to provide better services to enterprise-level clients.

Vechain works on a proof-of-authority (PoA) consensus mechanism, which is essentially a proof-of-stake model where what is staked is identity rather than assets. The proof-of-authority consensus is much more scalable and a lot faster than Bitcoin’s proof-of-work. This also means it wastes a lot less energy.

Vechain’s decentralization has long been a source of contention within the community. Currently, they are governed by a “Steering Committee” that is elected by the community. Their reasoning for having chosen this governance model is that they believe a truly decentralized chain is inefficient and in the end stifles innovation.  However, they still claim to be working towards decentralization in the future. 

What is the Unique Value Proposition of VeChain?

Vechain-As-A-Service (VeaaS) is a Vechain architecture for building decentralized applications where Vechain offers blockchain ‘as a service’. What this means is that clients can develop their own decentralized applications on top of Vechain without having any development experience.

Vechain’s broad suite of protocol services includes core technologies like the VechainThor blockchain, Vechain Wallet, and VET. Vechain also provides VET token for store of value and transactions and ThorPower (VTHO) which is used for paying gas fees. Having these separate tokens allows control over fluctuation in fees and congestion. 


The Future of VeChain

It’s the perfect solution for institutions and large corporations due to its unique identification (ID) and anti-counterfeiting use cases. Vechain encompasses everything from high-level to low-level tracking, including its recent anti-fraud technologies. It’s clear that Vechain has a lot to offer businesses in regards to managing logistics, but they are not the only, and they certainly won’t be the last.

What might make them one of the most adopted blockchain business solutions is the founders’ dedication to reducing the project’s carbon emissions. Due to initiatives like the Paris Accord, this is a factor in adopting new technology that countries are going to be weighing heavily.

China is one such country, and it is rumored that Vechain could be one of the few blockchain projects that China actually accepts. Just think, if the country helps to support Vechain in global adoption, they could contribute to diminishing the number of counterfeit products being illegally produced on their own soil and around the world.

What is VeChain VET?

Every year, counterfeit goods amount to trillions of dollars in global revenue. China is responsible for 80% of the fake products that are sold all over the world. Sadly, it doesn't stop at fake Rolexes sold online for $100. It has spread even to the pharmaceutical sector, and it's only getting worse.


How does it work?

VeChain operates using a similar mechanism to Ethereum. It uses two native tokens, the VeChain Token (VET) and VeChain Thor Energy (VTHO). VET is used for transactions on the platform, while VTHO is like Ethereum’s GAS and is used to power transactions for the applications on the VeChain platform.

What makes it stand out?

While there are similarities between VeChain and Ethereum, there is one major difference between the two. On Ethereum, if developers do not budget enough ether for a transaction it will fail to execute. But with VeChain, if developers do not budget enough VTHO, they can mine more. The upshot of this is that VeChain is more predictable for developers. VeChain is also one of the few blockchain platforms with a large base of corporate users.

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