What is VeChain Thor (VET)? A Blockchain Platform Aimed to Digitize the Supply Chain and Tackle Goods Counterfeiting
VeChain Thor (VET), a smart contract supporting solution, combines the Internet of things (IoT) technology with a blockchain in order to digitize the supply chain.
VeChain Thor (VET) is a public blockchain solution, supporting smart contracts, specially designed to give companies an easy way to track their inventory. It combines the Internet of things (IoT) technology with a blockchain in order to digitize the supply chain.
VeChain allows brands to monitor their sales channels in real time by putting Radio-frequency identification (RFID) labels on the products, which help consumers to track the whole history of a product in just a few clicks.
Basically, the project aims to solve the problem of counterfeiting goods on the market.
Imagine you want to buy a Gucci bag, but you are not sure if it is original or fake. If Gucci is partnering with VeChain, you can simply scan the RFID tag and receive all historical information about the product – year of production, country of origin, type of material, etc.
Brief history of VeChain
VeChain (VEN) is one of the first cryptocurrency technology companies in the world, founded in 2015.
The project launched its Initial Coin Offering (ICO) in August 2017. VeChain was built on the Ethereum platform as an ERC 20 token, but at the end of June 2018 it launched its own blockchain and rebranded to VeChain Thor. Its ticker symbol also changed from VEN to VET.
VeChain has a strong core development team and more than 150 employees around the world. Its CEO, Sunny Lu, has a solid background in IT and Information Security across luxury retail brands. He is a former CIO of Louis Vuitton China.
That’s why their main focus, in the beginning, was the luxury goods industry, but VeChain has also proven itself as a successful blockchain implementation in other industries like wine, agriculture, automobile, liquor.
When you offer B2B solutions the only way your project can increase its community adoption is by making significant alliances. Here are five key VeChain partnerships that helped the project grow.
● PricewaterhouseCoopers (PwC)
In May 2017 VeChain became part of the PwC's incubation program. This partnership is aimed to provide VeChain with access to the Hong Kong and South East Asia markets and PwC could optimize its accounting techniques by implementing the VeChain’s blockchain technology.
● Government of Gui’an
This is a partnership on a national level with the Chinese government. China wants to develop the mid-west part of the country, and that is why Gui’an is a strategic zone. It is part of an experimental national initiative. The plan for it is to become a “smart city” and VeChain was the only selected blockchain technology provider to participate in the building of this new area.
Some of the use cases of VeChain in Gui’an should be to certify government information sharing and to provide traceability solutions for the wine industry and the energy trading. The ultimate idea of this project is to prove to the government that the blockchain technology can be really useful for the country.
Similar projects in the past like the development of Shenzhen and Shanghai Putuo showed that might have a huge impact on the national economy.
● Shanghai Waigaoqiao Direct Imported Goods sales centre Ltd. (DIG)
A total of 30% of all wine imported to China comes through DIG and VeChain provides a tracing platform for DIG. Each bottle contains a label which can be scanned by every customer to check if the product is genuine. This information can’t be faked because it is stored on the blockchain which is immutable.
● Kuehne & Nagel International AG
This is one of the leading transport and logistics companies in the world with over 1300 offices in 108 countries and over 75 000 employees. What VeChain does for K&G is to provide a more transparent way for their customers to track the shipping parcels.
● Liaoning Academy of Agricultural Sciences (LAAS)
VeChain is developing a proprietary blockchain agricultural cloud platform for Liaoning Province alongside with LAAS.
● DNV GL – Certification
DNV GL is a global provider of assurance services, and the world's largest classification society. VeChain will help DNV GL increase the efficiency of their supply chains and make the entire journey of a product from the factory to the consumer traceable and transparent.
VeChain technology features
VeChainThor claims to be a new generation of public blockchains, called blockchain X. It has the following key features:
● New Governance Model
Usually, we think about blockchain projects as completely decentralized, but VeChain Thor is designed to find the right balance between decentralization and centralization. On top of the VeChain Foundation are the stakeholders with voting authority which elect the governing body of the organization - the Board of Steering Committee (referred to as, the “Board” or “SC”).
The Board represents the balanced interests of the VeChain blockchains stakeholders.
There are six types of stakeholders with voting authority. They are determined by the amount of VET tokens they hold in their wallets and if they are individual or enterprise users. The more tokens they have, the more impactful their vote is.
In order to be in one of those six categories, you should have at least 1, 5, 15 or 25 million VET.
Now is the time to point out that after the launch of VeChainThor mainnet users received 100 VET for each VEN they had.
● New Economic Model
VeChain Thor introduced a new economic model in order to make more predictable and stable conditions for the business owners, which are their target users. The economic system is similar to NEO’s because additional to VET there will be a new cryptocurrency called VeThor Token (VTHO).
The idea is that VeChain token (VET) will be used for business and financial activities and VeChaihThor Token (VTHO) will be used for payment and smart contract execution transactions.
The base generation of VTHO is 0.00042 VTHO a day per 1 VET.
● Proof-of-Authority (PoA)
VeChain uses PoA as consensus protocol with the idea to find the balance between decentralization and centralization. Every block validator on the network should be identified by name. There are 101 known validators (Authority Masternodes) on the platform and all of them are authorized by the VeChain Foundation and VeChain community.
There are multiple requirements to be an Authority Masternode like holding at least 25 million VET, providing a secure and performing node environment and proofs for additional advantages for the VeChain ecosystem.
Anyone who wants to become a block validator should fill out an application form and wait to be authorized. Eventually, this consensus mechanism is aimed to scale the network to 10 000 transactions per second.
VeChain vs. Waltonchain
As of August 2018 the biggest competitor of VeChain, based on market capitalization, is Waltonchain. The main goal of both projects is to combine RFID chips with blockchain technology in order to provide a more efficient and transparent way of managing supply chains.
The production of RFID tags is one of the big differences between the projects. Waltonchain will start mass production of its RFID tags in 2019, while VeChain will still have to rely on third-party manufacturers.
However, Waltonchain technology provides only B2B tracking solution, meaning consumers can’t track the history of a product on the platform. VeChain, on the other hand, gives that option to the end user.
In contrast to VeChains PoA consensus mechanism, Waltonchain uses Proof-of-Stake & Trust (PoST) and multi chain design to solve the scalability issues.
Coin price development
VeChain raised around $20 million dollars during their ICO in August 2017. Yunbi was the first exchange to list VEN, but during the first two days of trading, the price of 1 VEN tanked from $0.40 to $0.10.
It reached its all-time low on September 11, 2017, when 1 token was trading for just $0.05.
However, at the end of 2017 VeChain started its massive spike from $0.23 on December 1 to $9.55 on January 22, 2018 – its current all-time high.
Keep in mind that these were the trading prices of VEN. After VeChain mainnet was launched on June 30, 2018 and the project was rebranded to VeChain Thor the token VEN became VET.
The supply of VET was multiplied by 100, so for every 1 VEN that users had, they received 100 VET.
In other words, if you want to relate the all-time high price to the current supply, you have to divide it by 100.
As of August 2018, the circulating supply of VET is 55,454 billion tokens, while the total supply is 87.337 billion VET. The price of one VET is $0.025, which ranks VeChain Thor at number 17 of all cryptocurrencies with a market cap of $1.41 billion
VeChain targets price stability for its token
VeChain goal is to provide businesses and consumers with the ability to determine the quality and originality of the products they purchase. It is designed to enhance supply chain management through blockchain technology.
Whether securing a way of buying an authentic Rolex watch or delivering quality food, the potential use cases of VeChain are endless and all of them could change entire industries.
However, I bet that the main reason for most of the small investors to put money in VeChain is a lot more pragmatic than changing the world as we know it. Of course, I am talking about potential profits.
But is it worth buying VET as an investment?
Only time will tell. However, before doing it, keep in mind several things.
First, VeChain acknowledges that the largest obstacle to adoption of massive applications on blockchain is token price volatility. VeChain increased its token supply in order to offer more attractive and stable conditions to its targeting partners - corporations and enterprise business owners.
VeChain partners need a reliable way of planning their investment and big price movements don’t relate to that. At the end of the day, I believe the VeChain Foundation will make everything in its power to satisfy the demands of the big corporations.
VeChain could be a good way to diversify your cryptocurrency investment portfolio, but I don’t see it as an asset which will bring you massive profits.
The views and opinions expressed by the contributor in this text should not be considered financial or investment advice, neither treated as an expression of Cryptovest’s view. Neither the author nor the publication takes any responsibility or liability for any investments, profits or losses you may incur as a result of this information.
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