This blockchain was created to solve major problems that arise in supply chains. The network combines the physical tracking of goods with blockchain records, which helps control the history of a product from the time it is produced to the time it is delivered to the customer.
Vechain was created in response to the fact that despite the anti-counterfeiting measures being taken, counterfeit products keep showing up on store shelves. And it is not only ordinary customers who suffer from it. As of 2017, losses from fraud in the luxury industry amounted to $30 billion.
Therefore, the emergence of the Vechain network and cryptocurrency has attracted attention even though there is quite a lot of competition among blockchain projects. The implementation of the approaches offered by this platform significantly increases the reliability and transparency of the entire supply chain.
First and foremost, it is a blockchain designed to solve a large list of supply chain problems. By design, this platform allows you to determine whether a product is genuine or counterfeit.
The main goal is achieved in a fairly simple way - each product is assigned a unique identification number. The project also uses sensors which allow tracking what happens to a product on each separate section of the supply chain. This way, companies can be sure that the goods are okay, and customers can be sure that they are not getting counterfeit products.
The network uses a decentralized blockchain structure to build trust. It is based on the Proof-of-Authority consensus-based distributed ledger mechanism (a variation of the Proof-of-Stake mechanism). This results in higher transaction speeds compared to blockchains using the Proof-of-Work mechanism.
Users are able to access information about a product at any point in time. However, this requires holding a certain number of project tokens (the exact number has not yet been established). This approach makes it possible to track processes at various stages of a product's "life," as well as manage the entire supply chain.
In addition to blockchain itself, the project uses real-world technology. For example, each product is given a unique identification number. This is done with the help of RFID tags (radio-frequency identification), QR codes or NFC tags (special stickers that can be read by smartphones, for example).
With sensors, information is read and written to the blockchain at each stage of the supply chain. At the same time, new data is added with each stage, giving a complete picture of the entire delivery at any given time. The sensors used in the Vechain network have been developed in partnership with renowned companies Bosch and Qualcomm.
Blockchain technology at this point helps ensure that the information is unchanged. If there is a failure in the delivery process (e.g., the goods are delivered to the wrong address), this will be reflected in the blockchain.
In addition to tracking the delivery process, the recipient of the goods also receives information about whether the shipping conditions are correct and whether the goods are authentic (not counterfeit).
The company was founded in 2015. The project was created thanks to the efforts of Sunny Lu, who previously served as CIO at Louis Vuitton China. The CEO of Vechain has extensive experience with luxury goods. In Vechain, he has combined his knowledge with the blockchain technology of the Internet of Things (IoT). Sunny Lu runs the company through a special foundation, the Vechain Foundation.
There are two types of tokens in the project - the Vechain cryptocurrency itself (VET) and VTHO tokens (like gas on the Ethereum network). VET is a security token (a digital security, analogous to a stock). Its main purpose is a value transfer. VTHO is a utility token and its main purpose is to conduct transactions on the network. Tokens differ from each other not only in purpose, but also in value.
Main ways of VET application:
- As a way to store value (similar to buying stocks or other securities).
- For Staking. The Proof-of-Authority consensus protocol provides additional profit from storing tokens in a wallet.
- To conduct any financial or business activity within the network (payment for services in the supply chain, for example).
With this model, the project separates transactions within the network and ways of storing value, which makes all transactions even cheaper and faster. By using blockchain technology, working with Vechain is completely secure. The VechainThor network (the main blockchain platform) allows the development of decentralized apps.
As the project is managed by the Vechain Foundation, all key development decisions are made by the delegates of this organization. Thus, it was decided by a vote to reduce the cost of VTHO by 99%. According to the community, this will attract the attention of developers of decentralized apps. At the same time, the project is also trying to attract those who are interested in the promotion of NFT, as well as various platforms of decentralized finance.
Various funds and well-known corporations in the world of finance are also interested in Vechain cryptocurrency. Particularly, Wootrade, which plays the role of a liquidity provider, has agreed to fully support the token, including the organization of swaps (transactions for the exchange of tokens of various blockchains).
The cooperation with Wootrade will provide the necessary level of liquidity to launch new decentralized apps, as well as to maintain the necessary volumes when dealing with steblecoins created on the Vechain blockchain. All of this, in turn, will contribute to the development of the ecosystem of the network itself.
Vechain Grant Program to support new projects
The Vechain Foundation has started a sponsorship program to encourage developers and teams to create blockchain-based applications. And so far, only projects that will work in the NFT (non-fungible tokens that allow you to record information about the possession of various unique items) can receive a grant.
Speaking about the prospects of Vechain cryptocurrency, it's impossible to ignore the issues of partnerships, as the companies that choose this network as the main platform will be the main driving force behind the demand for tokens in the future.
In particular, there is a strategic agreement with PWC (Professional Services Platform). Joint projects are being developed to create third-party projects to attract more clients.
In addition, Vechain's list of partners includes:
- DNV GL (an international insurance company).
- DIG (importer of wine and spirits).
- Renault (well-known French manufacturer of cars and machinery).
Strategic partnership agreements with the Bavarian car manufacturer BMW are planned in the near future.
Vechain's reputation in the community and the benefits of blockchain
The platform is viewed positively by the majority of the cryptocurrency community. Not the least of these are the key benefits of the project:
- Close connection to the real world. The idea of the project is indeed extremely useful, as it solves all the problems (or at least most of them), related to the trust of producers, suppliers, logistics and the end buyer. The project is already ready to be used, unlike many other blockchains, whose introduction into real business relationships is a long way off.
- Application of innovative technologies. The project uses more than just high-speed and reliable blockchain with the ability to scale and create decentralized applications. Developers order special devices that will allow them to track the location of the shipment, as well as information about it from the moment the product is created.
- Network security and information irreversibility. All data entered into the blockchain is immutable. As a result, users (companies and end buyers of products) can be sure of the origin of the goods, as well as of their correct and timely transportation.
By the way, despite a number of significant advantages, some critics of this blockchain exist in the community. The PoA consensus mechanism differs from classic PoS in the fact that when creating nodes, Vechain will choose who will be entrusted with transaction validation. In pure Proof-of-Stake, all you need to do is keep a certain number of tokens in a wallet.
Proof-of-Authority, is a kind of PoS with verification. That is, in order to own a node, not only will you need to store tokens, but you will also need to get permission to do so, which makes the project more centralized than other blockchains.
However, Vechain is not an isolated case of this approach. Proof-of-Authority is also implemented in the Universa blockchain.
Prospects for Vechain cryptocurrency: conclusions
Despite being criticized by cryptocurrency industry enthusiasts who believe that blockchain must necessarily be fully decentralized, the project is attracting attention from real businesses. The partnership agreements signed show a growing interest in Vechain.
As new partners are brought on board and blockchain projects are launched, future users will need Vechain's internal tokens for both storing value and conducting transactions. All of this will have a positive impact on their value.
As for the Vechain cryptocurrency forecasts, at the time of writing this review, the price of VET is significantly lower than the maximum values of $0.25.
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