Alexander NaumannThe potential applications for cryptocurrencies and blockchains are diverse. One important branch, especially for industry and companies, is logistics and supply chain management. The mining of raw materials, the manufacture of the product and the delivery to the customer – huge amounts of data come together, have to be processed and made available.
Mapping the supply chain with the blockchain
The blockchain seems to be made for this. Each block consists of information that connects to the chain in a way that is secure against forgery and tampering. This creates a massive, secure database. This is then distributed across the network to nodes and makes the data available to all participants.
Theoretically, such a database can be applied to various blockchains. However, they are already busy processing transactions and other smart contracts. A blockchain solution that focuses specifically on supply chains and databases would make more sense. And that’s exactly what VeChain (VET or VEN) aims to provide.
What exactly is VeChain?
VeChain (VET/VEN) is a cryptocurrency, blockchain and the name of the non-profit organization behind it. It was founded in Singapore in 2015. So one has been around for quite a while. It allows companies to record data on VeChain’s blockchain with the help of RFID (Radio-Frequency Identification). So companies can transfer and store data transparently and in a decentralized way. The focus is primarily on the areas of supply chains and the Internet of Things.
Proof-of-Authority comes into play
VeChain does not rely on proof-of-work or proof-of-stake. The specially developed “Proof-of-Authority” is used. With these advantages:
- Thanks to this consensus mechanism, the blockchain should be able to handle transactions in 10 seconds and 165 transactions per second.
- With a constant flow of data in the supply chain, such speeds are also necessary.
In doing so, VeChain relies neither on proof-of-work nor proof-of-stake. It uses its own proprietary “proof-of-authority.” With these advantages:
- Thanks to this consensus mechanism, the blockchain should be able to handle transactions in 10 seconds and 165 transactions per second.
- With a constant flow of data in the supply chain, such speeds are also necessary.
VeChain’s goals
The focus of the project is clearly on the real economy. One wants to provide a real use case for companies and industries. Companies should be able to assign a unique ID to each product. This will allow them to transparently record and verify the manufacturing process on the blockchain. Other parties will also have access to the data, such as retailers, suppliers, processors and customers. VeChain aims to build trust by eliminating the need for trust, as all manufacturing processes can be tracked by any party involved.
The proof-of-authority mechanism
A key component of the project is the proof-of-authority mechanism. Instead of relying on anonymous and decentralized miners, it relies on a fixed number of validators. This works as follows:
- Each validator runs a node, which in turn verifies new transactions.
- The validators themselves are selected by VeChain and are verified and monitored by the developers.
- The result is a fast blockchain, but one that can hardly be considered decentralized.
Companies are often not as interested in the decentralization of cryptocurrencies as they are in the solutions they provide. In this regard, the creators are striking the right chord.
Clauses and multi-task transactions
Another special feature of VeChain are the “Clauses”. These are any form of data input received by the blockchain. These can be token transfers or new data for supply chain capture. These Clauses can be aggregated and sent to the network in a bundled manner. This is called a “multi-task transaction.” This keeps transactions comparatively inexpensive and allows multiple data inputs to be processed at once.
VEN, VET and VTHO – the cryptos of VeChain
Initially, the cryptocurrency’s acronym was VEN. At that time, it was still an Ethereum project. So one did not yet have an independent blockchain. That changed in 2018. In February of this year, the mainnet went online, now fully emancipated from Ethereum. At the same time, the cryptocurrency was renamed VET. VET is the means of payment on the network and gives privileges to holders. A company with a large amount of VET coins is favored over other companies. Furthermore, VET can be converted into VTHO.
VET - the cryptocurrency of VeChain-
VET - Tradable since: 2018 - Maximum supply: 86,712,634,466 - Of which in circulation: 86,712,634,466 - Highest price: $0.2782 (04/17/2021) - Lowest price: 0.001678 US dollar (03/13/2020)
VTHO – the token of the VeThor network
VTHO is the token of the VeThor network, also called “VeThor” or “Thor Power”. This cryptocurrency allows users to gain access to the supply chain. So, a company that wants to add new data to the blockchain has to pay with VTHO. The fees depend on the processing costs. Furthermore, VTHO tokens can be earned passively by staking VET.
VTHO - Supply Chain Access-
VTHO - Tradable since: 2018 - Maximum supply: none - Of which in circulation: 44,699,704,975 - Highest price: $0.04201 (08/01/2018) - Lowest price: 0.0001526 (03/13/2020)
The node system of VeChain
Nodes are a fundamental part of many blockchain networks. In VeChain, there are three types of nodes with different functions and rewards.
- Authority Nodes: These are validators selected by the foundation. There are 101 Authority Nodes in total. Their role is to verify transactions, which rewards them with VTHO tokens. A participant must have at least 25 million VET.
- Economic Nodes: These nodes do not verify transactions, but provide stability to the network in other ways. You need at least 1 million VT for an Economic Node.
- X-Nodes: These are special economic nodes for particularly trusted participants. Basically, they perform the same functions, but the owners get more VTHO and other privileges.
Who founded VeChain?
The founder of VeChain is Sunny Lu, who previously worked at Louis Vuitton China. His goal was to develop a blockchain solution for the Internet of Things (“IoT”). In the same year, the non-profit foundation based in Singapore was founded. The focus is primarily on the Asian region, Europe and America.
Who is using blockchain technology?
In the meantime, the foundation has been able to enter into some weighty partnerships. These are often partners in the Asian region, for example China. Among them also well-known names in the European region such as:
H&M (COS): the H&M subsidiary COS stores its MyStory data on the VeChain. MyStory is a blockchain solution for tracking production chains, for example for wine.
BMW: VeChain was a participant in the “BMW Startup Garage Program.” During this time, BMW supported the project in terms of how the company could use it for its own purposes. The result is “VerifyCar.”
Kuehne + Nagel: One of the largest freight forwarders in the world. The company began using VeChain’s blockchain technology to track goods in 2018.
DB Schenker: DB Schenker is a global subgroup of Deutsche Bahn AG. DB Schenker’s operations include China, where it works with other logistics companies. Thanks to its partnership with VeChain, DB Schenker can check the performance of its partners on the blockchain.
Is VeChain a good investment?
The VET token has been available for trading since May 2018. So people entered the market just as the hangover after the big crash of 2017/2018 was setting in. This was also noticeable in the price of the cryptocurrency. The token held at around $0.007 until 2020. It wasn’t until August of the same year that the price rose above $0.01. The all-time high was tackled in April 2020. Since then, the price has fluctuated widely.
Use cases are important for price development
With a cryptocurrency like VeChain, the use cases and partnerships are especially important. It is important to keep an eye on whether companies are still interested in trying out this blockchain solution. Many important partnerships began in 2017 and 2018, and things have been rather quiet since then, though that hasn’t stopped the stock from scaling new heights.
Infobox: What is RFIDRFID
stands for "Radio-Frequency Identification", i.e. identification by means of radio frequencies. With the help of this radio network, objects can be automatically identified and located. This requires a transponder with a code and reader. This code identifies the object to which the transponder is attached. RFID technology is used in various areas, such as vehicle identification, credit cards, livestock, immobilizers and in the clothing industry.
FAQ – Frequently asked questions
VeChain is available for purchase on a number of exchanges, including some of the largest trading platforms, for example Binance, Bitfinex, Bitpanda, Crypto-com. On Bitpanda, it is possible to buy VeChain with standard trading currencies such as euros or US dollars.
The official wallet is called “VeChainThor Wallet” and was developed by the foundation. It is a mobile wallet for iOS and Android devices. It stores VET and VTHO tokens, as well as other tokens based on the VIP 180 standard. Furthermore, the Exodus, Guarda Wallet, Trust Wallet and Atomic Wallet can also be used.
To stak VeChain you need either a node in the network, such as an Economic Node. This is where the returns are the greatest. Alternatively, VET tokens can also be staked with the Exodus Wallet.
