A world of supply chains
Any product you have used today has been shipped. No matter what distance, it has been transported with a bunch of the same products at some stage. Logistics are extremely important for manufacturers.
However, there are some problems in this area currently.
Here’s an example. Let’s say a business processes 100 000 orders per year. It ships items from a warehouse. However, fulfillment errors happen due to the less-than-ideal technology used. Let’s suppose that fulfillment error rate of this business is 2% – an industry average. This means that it will fail to ship two thousand orders! The business could potentially lose up to 2000 customers, which will buy from its competitors next time.
But how can this number be brought down? By improving the tech that powers logistics processes.
Currently, the companies often use tech like NFC tags, QR-codes and RFID chips to track down the products. All the information usually gets stored on a centralized server. This solution, although working pretty good, has several central points of failure.
What the industry desperately needs is a way to decrease the number of these points of failure.
This is exactly what Vechain was created for.
How Vechain works
You might not have heard of Vechain previously, but that’s okay. The platform is not created for ordinary users. Instead, it targets businesses.
Vechain is a Blockchain-as-a-Service company. It provides businesses with blockchain-based tools for tracking supply chains (hence the Vechain name).
Who benefits from it? Both the business and end user.
Businesses receive a powerful tracking tool that will allow them to lower the error rate while shipping goods. After all, unlike in central database, if something happens to the information on one node of blockchain, there will be hundreds of others to correct the mistake.
Customers, on the other hand, will be able to verify whether their expensive purchase is not counterfeit, for example. All they will have to do is to scan the code or a special chip attached to the product. No more fake Louis Vuitton handbags!
As high-tech as it sounds, the solution should be possible to implement with the right amount of funding.
Vechain is a blockchain using Proof-of-Authority consensus algorithm. It is capable of processing 10 000 transactions per second – much more than Bitcoin, for example.
Such speed is certainly an advantage for the blockchain that will give it an edge over some competitors. However, in order to achieve it, Vechain had to sacrifice decentralization in a certain way. The only network participants that are able to approve transactions are 101 block producers (LISK uses a similar approach). Each of the producers is selected by Vechain Foundation, meaning that it has a certain degree of control over the network.
But what is all that processing power being used for?
Mostly for supply chain management. Vechain will provide businesses with in-house manufactured chips for product tracking. There are several types of them: more complicated ones that are able to measure temperature or humidity, for example, and more simple RFID and NFC chips.
Just like cryptocurrency wallets, each chip has a private and a public key. Thanks to the key pair, the hash of information from every chip is stored in the blockchain. The information itself is stored in the CHAOS, which is a decentralized storage solution created by Vechain.
However, Vechain has ambitions beyond supply chain management.
Not only supply chains: enter Vechain Thor
With the introduction of Thor, Vechain announced its plans to expand beyond supply chain management. Vechain hopes to become a major player in the dApp platform field with the help of dual-token system (see Vechain tokens).
There are several reasons why it is a strong contender for the best dApp platform crown.
First of all, thanks to the Proof-of-Authority consensus mechanism, the network will stay fast and efficient as the number of dApps increases. This quality is important for businesses that want their dApps to be built on a robust platform with no bottlenecks.
Second, Vechain Thor uses a lot of Ethereum’s components, both vanilla and modified. Some of the shared components are Ethereum Virtual Machine (EVM), the account model and the RPL encoding method. This lowers the entry barriers for developers, making it possible to port dApps from Ethereum to Vechain platform with relatively low effort.
The last reason why Vechain Thor is a strong dApp platform is a number of business oriented features. For example, it supports multi-party payment and advanced transaction structure.
Even the best blockchain is worthless if it doesn’t get used and has no chances to gain real-world adoption. Not the case with Vechain: the project has a big list of partners already using or ready to implement its solutions.
Most of Vechain’s partners are Chinese-based, which is no surprise given the project itself is Chinese. Perhaps the most important of these collaboration is one with the Chinese government, which has chosen Vechain as its partner in building blockchain solutions for the Gui’an New area.
Here are some other Chinese Vechain’s partners:
- BYD – one of the world’s largest electric car manufacturers.
- Walmart China – a Chinese branch of the US-based retailer, which has more than 400 stores in the country.
- China Unicom – a state-owned telecommunications operator.
However, Vechain’s partnerships are not limited to Chinese companies. The project has more than 10 global partners, including Renault, BMW and Kuehne Nagel. While some of these companies view Vechain’s blockchain as a technology they could use in the future (BMW, for instance), others are already using it. A great example of the latter is DB Schenker, which is already using a Vechain Thor based supplier evaluation system.
Other global Vechain’s partners include:
- NTT Docomo – the largest telecommunications provider in Japan. The company chose Vechain as its technological partner in IoT and 5G field.
- Norway in a Box – company exporting high-quality Norwegian foods to the international markets. Will use Vechain to track products that ship to China.
- PwC – an auditor providing services to more than half of all the Fortune 500 companies.
The list of Vechain partners is constantly growing, so don’t be surprised to learn that Vechain collaborates with some companies not listed here as well.
Vechain uses two types of tokens: Vechain (VET) and VeThor (VTHO). Each of them has a certain role in Vechain’s ecosystem.
Vechain (VET) is a token that is used in transactions on Vechain network. Holding VET gives users certain privileges, such as the ability to run “economic nodes”. Vechain holders also generate VTHO as a reward – the current rate is 0.000432 VTHO per VET per day. There is a limited supply of VET – there won’t ever be more than 87 billion coins.
VeThor (VTHO) is a token that is used to cover transaction costs on Vechain network. It serves the same function as GAS does in NEO network. It is generated by VET holders. The supply of VTHO is not limited, and the generation rate can be adjusted by Vechain. VTHO can be sold both for VET and BTC, meaning that VTHO generation can serve as an additional income for VET holders.
Vechain (VET) price history
Prior to 2018, Vechain used the ERC-20 based VEN token. It could be bought during Vechain’s ICO and was used as a placeholder.
However, once Vechain’s own network was up and running, the project abandoned VEN in favor of Vechain-based VET. All the holders of VEN could swap their coins for VET, receiving 100 VET for every VEN they had.
The native Vechain token was released at the end of 2018 – the middle of the bear market – which should explain its unimpressive economic performance. The coin first became available for purchase in August 2018, it cost a little over 1.5 US cents. Shortly after, it lost 50% of its value; however, less than a month later it reached its ATH of almost 2 cents.
Following the ATH, VET price has mostly decreased. On December 15, 2018 it reached the lowest value to date – a touch over 0.33 cents. Since then, it has remained in 0.3 – 0.95 cents range with several spikes and dips. At the time of publishing, a single VET token costs approximately 0.5 cents.
Best Vechain wallet
If you need a mobile wallet, then VeChainThor wallets developed for iOS and Android by the team themselves will be your safest bet. However, mobile wallets can not be very safe due to their design (read our wallet type comparison), so you might want to hold your VET elsewhere.
Unfortunately, Vechain doesn’t have an official desktop wallet. This means that the safest way to store it is to use a hardware wallet. For example, Ledger Nano X supports Vechain.
Frequently asked questions
Where can I buy VET token?
The exchanges with the highest VET volume are MXC and OceanEx, which makes them perfect for buying the token at a lucrative price. However, if you are already using Binance, it is a great choice as well, with only slightly lower VET/BTC and VET/USDT market volumes. You can read our comparison of best exchanges here.
Is Vechain decentralized?
Technically yes, with 101 masternodes. However, there are caveats. Because every single masternode is a company chosen by Vechain, technically it controls the network. Vechain is decentralized “on paper”, and quite centralized in reality.
Is Vechain approved in China?
Yes! It is one of the few cryptocurrency projects to be officially approved by the Chinese government.
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