VeChain was created by creator and co-founder Sunny Lu, an IT executive and former CIO of Louis Vuitton China. Lu has since become a well-known name in the cryptocurrency industry. She has also highlighted blockchain technology’s ability to specifically address transparency, advocating the idea that it could create “trustless” structures that are not subject to corruption as part of the supply chain.
Vet Coin, which is very different from Bitcoin in terms of its operation and features, is the native asset of the blockchain-based semi-decentralized cryptocurrency network VeChain. The primary goal of VeChain is to make these processes and information flow more efficient for multi-way supply chains through the Distributed Ledger Technology (DLT) procedure.
VeChain is a blockchain platform designed to improve supply chain management and business processes. VeChain aims to streamline processes and information flow for complex supply chains using Distributed Ledger Technology.
The Vechain platform includes two different tokens, known as VeChain Token (VET) and VeChainThor Energy (VTHO). VET is used to transfer value across VeChain’s network, and VTHO is used as energy or “gas” to power smart contract transactions.
VeChain, which started in 2015 and was launched in June 2016, aims to use distributed management and Internet of Things technology to create an ecosystem that solves some of the major problems related to supply chain management. The project uses two in-house tokens, VET and VTHO, as mentioned, to create and manage value based on the VeChainThor public blockchain. The main idea of the project is to increase the efficiency, traceability, and transparency of supply chains while reducing costs and giving more control to individual users.
Jay Zhang, one of the co-founders who oversees VeChain’s global corporate structure and oversees its governance and financial management, previously worked in finance and risk management at both Deloitte and PriceWaterhouseCoopers. Launched in June 2016, VeChain is one of the oldest private blockchain supply chain platforms on the market.
Initially, the VEN token functioned on the Ethereum blockchain. VeChain transitioned to its own blockchain and rebranded itself in 2018. As part of the rebranding, the VEN blockchain became the VeChainThor (VET) blockchain.
The goals of the VeChain blockchain platform are outlined in its whitepaper. Its primary goal is to disrupt the supply chain industry by making data actionable and transparent. It also plans to be a leader in dApps (Decentralized Applications) and initial coin offerings (ICOs) using VeChain, and to become an Internet of Things (IoT) broker.
To help achieve this goal, VeChain has long signed strategic partnerships with several companies, including a deal with PricewaterhouseCoopers (PwC) to use VeChain’s blockchain-powered solutions by the accounting firm’s client base to improve product verification and traceability.
VeChain has also partnered with Renault to create a digital vehicle maintenance book that cannot be tampered with, along with Microsoft and Viseo, and is the government technology partner for Gui'an, an economic development zone for the Central Chinese Government.
Understanding the Term VeChain
VeChain states that its goal is to “create a trustless and decentralized business ecosystem platform to enable transparent information flow, efficient collaboration, and high-speed value transfers.” Supply chain data for business processes is currently fragmented into silos across multiple stakeholders. This also impacts the fragmented flow of information across stakeholders.
According to VeChain’s whitepaper, blockchain technology can “solve the problem of asymmetric information and allow ownership of data to revert to and incentivize the owner.” The VeChain platform claims to provide authorized stakeholders with a 360-degree view of the necessary information associated with a product and business processes such as storage, transportation, and procurement, creating greater market transparency.
Examples of How VeChain Can Be Used
For example, the VeChain system can be used to track the quality, authenticity, storage temperature, transportation environment, and last-mile delivery of any medicine package or alcohol bottle from the manufacturing facility to the final delivery to the end customer. To achieve this goal, VeChain uses smart chips or Radio Frequency Identification (RFI) tags and sensors that broadcast important information to the blockchain network, which can be accessed in real time by authorized stakeholders.
The application of sensors means that all product-related parameters can be continuously monitored and any problems can be communicated to the relevant stakeholders. Manufacturers and customers are informed if a pharmaceutical package is stored outside the prescribed temperature range, enabling service improvements and better quality control.
In another example, the VeChain platform could enable car owners to own their data and use it to negotiate better terms and policies with insurance companies.
VeChain'in Blockchain Platformu
The VeChainThor blockchain platform is a public blockchain designed for “mass business adoption.” As mentioned, it contains two tokens, known as VET and VTHO. VET is known as the VeChain token, which is used to move value or “smart money” from smart contracts. In other words, transactions in decentralized applications occurring on VeChain’s blockchain will use VET. It can also be used by the general public for investment.
The VTHO token stands for VeChainThor Energy, also known as VeThor Energy. It is used to power transactions on VeChain and is equal to the cost of executing transactions on the blockchain. The project is similar to Ethereum’s ether and NEO’s “gas” in that developers must budget for a certain number of base tokens (non-public) to process transactions for their decentralized applications. According to VeChain’s whitepaper, the two-token system is designed to have effective governance and a predictable economic model for decentralized application developers. In its current form, Ethereum lacks such a model because the price of ether, the natural gas token, is volatile. Therefore, developers must estimate the amount of ether required for a transaction. Transactions fail if the estimates are incorrect. VeChain’s whitepaper outlines several technical improvements its platform has made to overcome this problem. For example, the VET blockchain allows for Proof-of-Work (proof-of-work) to be executed for each transaction. This means traders can mine more VTHO if their initial estimates are wrong.
Management Protocol
The VeChainThor blockchain uses Proof of Authority as a consensus protocol. Under this protocol, votes are distributed based on VET assets and disclosure. VET holders without Know Your Customer credentials and having 1 million tokens in their accounts are assigned 20% of all votes, while VET holders with KYC and the same amount in their accounts are responsible for 30%.
There are 101 masternodes responsible for reaching consensus on transactions on VeChain’s blockchain. This system is different from Bitcoin, which requires all nodes to vote on a transaction before reaching consensus. Anonymous nodes are not allowed, and revealing one’s identity is an essential prerequisite to becoming an authorized masternode. According to VeChain’s whitepaper, this system uses less power and does not require a minimum number of validators to reach consensus.
The other type of masternode in VeChain is the economic masternode. These do not produce blocks or ledgers and are used as a power controller. This means that each economic masternode is allocated a certain number of votes based on their VET holdings. Every 10,000 VET held by an economic masternode receives a single vote.
The masternode system centralizes voting rights in a decentralized system, but VeChain’s founders say their goal in designing this protocol was to strike a balance between centralization and decentralization.
How is the VeChain (VET) Network Secured?
VeChain (VET) is a Proof of Stake token, and VeChain itself describes that relatively low computing power is required to ensure network security and maintain user consensus. A separate feature, Proof of Authority, involves masternode operators who exercise authority over the protocol in their own interests according to rules set by the parent organization, the VeChain Foundation.
