VeChain is an enterprise-oriented platform that has the goal to connect blockchain tech with specific business cases, specifically in the area of quality assurance, data authenticity management and supply chains.
What Is VeChain
The VeChain project was born out of a desire to have a scalable, blockchain-powered platform for data processing and applications on the Internet of Things (IoT) to solve real-life economic challenges faced by modern businesses. Although the reach of VeChain’s application is continuously expanding, its key push has been issues such as fraud and counterfeit products, in which this platform helps to guarantee the authenticity, source tracing and adherence to safety standards of a product.
VeChain is all about managing business-relevant information, such as data on various stakeholders, events or goods, with blockchain playing the role of guardian of the validity of various digitized data. Its business model revolves around understanding that trust is an valuable tool for both companies and their customers and a shared point of interest. The key components of the platform are the VeChain network (VeChainThor), which implements the native proof-of-authority consensus protocol of the platform, and its dual token scheme comprising the tokens VeThor (VTHO) and VeChain (VET).
The VeChain Foundation was established as a non-profit organization in Singapore in July 2017 and is the oversight body for the VeChainThor protocol and the VET blockchain as the foundations of VeChain. Previously known simply as VeChain (VEN), it was rebranded in 2018, the same year that it launched its mainnet. The project was initially conceived back in 2015 as a website dedicated to monitoring luxury products. Sunny Lu, the co-founder and CEO of the project, collaborated with some of the world’s biggest businesses and made this experience a part of VeChain’s quest to leverage blockchain for business world needs.
What Is VeChain Trying to Achieve?
Based on this, the VeChain team set out, via their platform, to achieve some different objectives:
- VeChain considers knowledge exchange openness on a global scale as the main driver of business cooperation and lightning-fast value transfers. VeChain aims to link enterprises, users of software, smart contracts and network providers within a single ecosystem focused on ensuring symmetrical and open flow of information based on data digitisation. In it, businesses will benefit from reducing associated trust-related costs, such as verifying the authenticity of procured goods via digital means, rather than using manual and paper documents to do so.
- One example is VeChain’s use in countering the production of counterfeit wines. Customers can use a mobile app to check QR codes for bottles and blockchain-verified descriptions of the winery, grape types and Chinese customs declaration numbers. We would also be able to see exactly when the bottle left France’s factory, and when it arrived in Shanghai. Other uses include luxury goods, cars, transportation, logistics, etc.
- VeChain wants to pioneer technologies that will make life easier for those customers who want their money to access genuine products. The emphasis of VeChain on forming partnerships with different industries does not end only with the benefits offered to businesses. Based on the use of IoT sensors and tagging technologies, the project’s aim is to ensure that the platform serves as a repository for registered goods, with information on their authenticity and source, date of manufacture, and storage methods accessible to consumers without any manipulation possibility.
- To do this, the company aims to provide a set of identifiers that are stored on its blockchain in the form of RFID tags or QR codes that are attached to the finished goods. As part of the pilot project with H&M fashion stores, a groundbreaking application of this software was introduced. Upon scanning the identifiers, consumers would have real insights into the goods they wish to purchase, thus strengthening their degree of trust in a specific brand and helping authorities ensure that the items comply with various anti-counterfeiting and safety regulations. The same applies to retailers and third parties who collaborate with branded drug suppliers, who can do the same at any point of the sales process.
- To encourage acceptance in the mainstream, VeChain aims to make its blockchain easy to implement and accessible as a service. With that in mind, the VeChainThor is being marketed as a reliable and secure network designed as a turnkey solution for organizations that do not have the time or money to build their own similar systems. VeChain includes both hardware and software components that operate alongside a well-developed network of technical and business partners whose innovations are open to all VeChain ecosystem participants. At the same time, VeChain also offers access to the Blockchain-as-a-Service (“BaaS”) platform called ToolChain which offers features related to process control of the supply chain, product lifecycle management, data management and certification. ToolChain is planned as a portal for SMEs to access blockchain technology without being hindered by the lack of financial capital for such migration.
What Is VeChain Platform’s Economic Model?
VeChain’s VTHO represents the underlying cost of using VeChain and will be absorbed after all operations of the blockchain are carried out. VET’s purpose is to serve as a value-transfer medium, or in other words, smart money, to allow rapid, VeChain-based value circulation within the ecosystem. VET is also awarded to network nodes that help ecosystem ease through their service as an incentive type. These economic nodes are not part of the consensus model (see below) and should function as a stabilizing VeChain link.
The system is structured so that VTHO is automatically created by holding onto the VET tokens. In other words, anyone who holds VET will be given VTHO free of charge and will be able to use VeChain free of charge as long as the performed operations consume less than the created VTHO. The VTHO tokens can be transferred and exchanged to allow users to purchase additional VTHO to perform larger operations such as running applications hosted on the blockchain of VeChain Thor.
How Does Proof-of-Authority Work?
The governance model of VeChain is built to foster equilibrium between decentralization, accountability of centralisation, and productivity. The governing body is the Steering Committee that is elected by VeChain group members. The network depends on approval from the Proof-of-Authority (PoA). VeChainThor platform features stakeholders made up of VET holders who often get assigned different positions, such as Smart Contract Owners and Authority Masternode holders. The number of Authority Masternodes is limited to 101, and the VeChain Foundation and VeChain group are required to approve them.
Network transactions and blocks are validated via approved accounts which are known as validators. Validators run software which allows them to block transactions. In order to be given the right to validate and produce blocks, these individuals or organizations must voluntarily reveal their identity and provide information about their credibility beforehand. The method is automated, so validators do not need to track their machines continuously. However, it does demand that the machine (the node of authority) remain uncompromised.
On that basis, VeChain promotes this model of consensus as providing the following main advantages:
- Low computational demand
- No need for coordination between Authority Masternodes to achieve consensus
- The stability of the device doesn’t depend on the number of Masternodes available
- Proof-of-Authority is handled by built-in smart contracts, with hard forks avoidable in cases where an update is not carried out by the Authority Masternodes.
Technology Featured in VeChain’s Architecture
The VeChain framework features many components that make up the bulk of its architecture alongside supported technologies:
- The Platform’s center is VeChain Mainnet.
- VET blockchain provides smart contract support system.
- Multi-Party Payment (MPP) is the mechanism that facilitates faster onboarding of parties in charge of paying for other parties’ initiated transactions. It is part of a set of features for the Meta-Transaction platform.
- Multi-task Transaction (MTT) program allows atomic transfers, batch payments and multiple calls into one single transaction to different contract functions.
- VeChain’s native ICO network is mainly intended for startups with the aid of the VET blockchain, which can manage proper cryptocurrency offers.
There are more than 55.5 billion VET tokens in circulation as of September 2019, out of a total supply of about 86.7 billion. Its market cap as of the time of writing stands at USD 186 million, while its all-time high saw the currency’s cap worth more than USD 1 billion back in September 2018. The coin, VET, is available on cryptocurrency exchanges including Binance and HitBTC. For Android and iOS the official VeChainThor Wallet is available.