What is VeChain (VET)? A guide for beginners (2021)
Founded in 2015 VeChain has become a platform that aims to improve and control business processes, supply chain management, and even carbon emissions around the world. There are currently more than 500 firms and enterprises that use the VeChain based solutions, and their number continues to grow. So what is VeChain? Let’s go deeper together!
|Consensus Mechanism:||Proof-of-Authority (PoA)|
Table of Contents
- What Is VeChain?
- A Brief History of VeChain
- How Does VeChain Work?
- Where can VeChain be used?
- VET Token and VeChain Thor (VTHO)
- Where Can You Buy VET?
- Where to Store VeChain?
What Is VeChain?
VeChain is a distributed business ecosystem providing large and small businesses with blockchain supply services. It aims to improve business processes and supply chain management around the world and to build a trust-free and distributed business ecosystem for transparent information flow, efficient collaboration, and high-speed value transfers. Official Website
VeChain offers enterprises the ability to track data regarding items, such as quality authenticity, storage temperature, and transportation status. It is provided via a trust-free and distributed business ecosystem. By that companies may reduce overhead and improve accountability.
VeChain’s goal is to combine DeFi (decentralized finance) and CeFi (centralized finance) sectors. This can be used for building a balanced platform that provides users with transparent information flow, efficient collaboration, and high-speed value transfers.
A Brief History of VeChain
VeChain was founded in Singapore in 2015 by:
- Jay Zhang, the former senior manager in finance of PwC China and Deloitte UK.
- Sunny Lu, the former chief information officer of Louis Vuitton China. He is the current VeChain chief executive officer.
VeChain is operated by a non-profit company the VeChain Foundation with headquarters in Singapore, Shanghai, Tokyo, Paris, Luxembourg, Palo Alto, and Hong Kong. The Foundation consists of over 50 blockchain application developers. It initially started as a branch of BitSE, one of the largest blockchain companies in China.
VeChain first launched its VEN ERC20 cryptocurrency on the Ethereum (ETH) blockchain as a basis for fundraising its blockchain. In 2018, the VeChain team launched the VeChainThor (VET) blockchain. It was supposed to be a public blockchain for “mass business adoption” according to the VeChain white paper. VEN tokens were rebranded into VET tokens at a 1:100 ratio. VET cryptocurrency started running on the native VeChain ecosystem.
How Does VeChain Work?
Internet of things (IoT) is the system of physical products equipped with sensor chips for connection and data exchange with other systems on the internet. VeChain ToolChain is a combination of IoT and blockchain technology. It is a functional Blockchain-as-a-Service (BaaS) platform for businesses implementing blockchain into their data management or product lifecycle tracking.
VeChain assigns a unique identity to a physical product via QR Codes, NFC (near-field communication), or RFID (radio frequency identification). Sensor chips developed by VeChain record information at every stage of the supply chain in real-time and link it to the product’s identity. This process runs on a blockchain, so the recorded data can’t be changed.
It solves several problems:
- VeChain helps track and check critical data. For example, if goods are delivered to the wrong place, the blockchain record shows exactly where the mistake has happened.
- It allows the receivers to verify if the goods are authentic. Let’s say, a small sensor is placed inside a high-end handbag. When scanning it reports a full history of any materials used in production and all the processes from production to delivery. Even after the handbag is sold, this sensor helps a new owner to verify its authenticity.
Proof of Authority
One of the blockchain technology features is the approval of any new block by multiple people before adding it to the blockchain. A block is a record of transactions and a nearly unchangeable part of the blockchain. It means that anyone can submit information to be stored on a blockchain. Therefore, it is important to have rules that can ensure everyone agrees with added information. These rules are called consensus protocols. They verify transactions and help keep the network safe.
The VeChainThor blockchain uses a consensus protocol called Proof-of-Authority (PoA). It runs as follows: there is an approved group of people called validators. Each of them validates new additions to the blockchain via computer software. Such a mechanism makes transactions a lot faster than proof-of-work (PoW) and proof-of-stake protocols (PoS).
Proof of Authority (PoA) consensus delegates power to certain 101 master nodes in the VeChainThor blockchain. Thus, only those nodes are made responsible for reaching consensus and confirming transactions. Unlike Bitcoin blockchain, where all nodes are required to vote on a transaction before reaching consensus. This means that it passes transactional blocks only via Authority Masternodes. These nodes need to hold at least 25 million VET altogether. VeChain calls it “the nodes need to be vetted”.
Two Token Design
VeChain runs two native cryptocurrencies:
- VET coin - for storing and transferring value.
- VTHOR (VTHO) token - for executing transactions on VeChain. This token is used to pay for a transaction on the blockchain.
Just as the Ethereum blockchain uses Ether (ETH) and gas, VeChain miners earn VTHO fees for network computations. The VTHOR supply can be corrected for maintaining a stable transaction price.
This design is created to isolate the price volatility of VET coin from the computations fee on the network and to allow VeChain applications to charge stable fees.
Where can VeChain be used?
Food enterprises will be able to record key processes of food production in the blockchain in an unchangeable and secured way, bridging trust between enterprises and consumers.
During the COVID-19 pandemic period, VeChain was used as the basement of the E-HCert App. The application offers a decentralized, secure, and efficient record and storing system for lab results accessible only to patients and other authorized parties.
VeChain ToolChain is used in the fight against goods counterfeiting. By implementing an encrypted chip and tracing the history and life cycle of a product, such as logistics, warehousing, maintenance, and resale, consumers can be sure of product authenticity.
This has been used by Shanghai Waigaoqiao Direct Imported Goods to track luxury wines; Renault and BMW enterprises to track luxury vehicle components (LVMH), to track luxury leather goods; Walmart to track food provenance, and so on.
The VeChain platform allows automobile owners to store their driving information and use it for getting better insurance terms.
With the help of VeChain manufacturers and customers can be informed if the medicines’ storage conditions do not meet the requirements - stored outside the specified place or temperature range, etc). This can improve quality control.
Carbon emissions tracking
Using a combination of blockchain and IoT technology VeChain has created a reward program. Its goal is to reduce carbon emissions. When smart devices, such as cars or appliances, indicate that consumers are producing less carbon, they are rewarded with credits. These credits can then be spent on different VeChain services and partnership enterprises services.
VET Token and VeChain Thor (VTHO)
VeChain has two separate tokens to serve different needs: VET and VTHO.
VeChain (VET) is a cryptocurrency used in the VeChain system for storing and investing in an exchange, like most other cryptocurrencies. According to Coinmarketcap VET circulating supply now is 64.32 billion VET. VeChain’s total supply is 86,712,634,466 VET.
VET is also used to generate the second kind of token known as VeThor or Thor Power (VTHO). It is used to access supply chain technology. So if companies want to use VeChain’s tracking for their supply chain they have to pay VTHO to add more information to the blockchain.
The second token in VeChain is VeChainThor Energy (VTHO). VTHO token is not a cryptocurrency and is not publicly available. It functions as an energy token or gas to conduct all smart contract transactions.
Each VET creates 0.00000005 VTHO with every generated block, translating to a generation rate of 0.000 432 VeThor each day. VTHO is used as payment for writing data on the blockchain. The amount of the VTHO transaction fee depends on the data size being sent.
Where Can You Buy VET?
VeChain (VET) is in the top 50 cryptocurrencies by market capitalization and is supported by many large exchanges, such as Binance, BitFinex, and BitPanda.
How to Buy VET Using Guarda?
VeChain (VET) is not available for purchase on Guarda yet. However, you can easily import your VET wallet or send your VET to your newly created Guarda Wallet.
Where to Store VeChain?
There are various types of wallets supporting VeChain, such as Ledger Nano X/S, Trezor, and several multi-currency wallets. The easiest way to safely hold VET and VTHO is throught your Guarda Wallet. Available on Web, iOS, Android and all desktop platforms as well.
To sum all up, VeChain is an ambitious system and offers progressive blockchain solutions and tools for small and big businesses worldwide. VeChain platform offers a trust-free and distributed business ecosystem for high-speed value transfer and transparent information flow. VeChain inspires and incentivizes people to reduce their energy consumption and get carbon credits in return.