VeChain: What It Is, How It Works, Examples, and History

VeChain, a blockchain platform, was created with the intention of enhancing business processes and logistics. The use of distributed ledger technology (DLT) is proposed to accomplish the aforementioned goals of standardising these procedures and enhancing the flow of data for intricate supply chains.

There are two different digital currencies that can be utilised on the Vechain network: the VeChain Token (VET) and the VeChainThor Energy (VTHO). Both are used on the VeChain network, although the latter acts as a “gas” to fuel the execution of smart contract activities, while the former is used to transport value throughout the network.

Key Points

VeChain is an enterprise blockchain platform designed to unify fragmented data sources into a unified picture of a company.

VeChain aspires to become the go-to platform for managing monetary transactions involving IoT devices and for conducting initial coin offers (ICOs).

Both the VeChain token (VET) and the VeChain Thor Energy token (VTHO) are used on the VeChain network; the former serves as a value layer and the latter as a smart contract layer.

Basics of VeChain

It is VeChain’s stated goal “to build a trust-free and distributed business ecosystem platform to enable transparent information flow, efficient collaboration, and high-speed value transfers.”

The supply chain data that is currently being used for commercial purposes is being held in silos and compartmentalised by a variety of parties. This alters the dissemination of data, which in turn affects the interests of all parties involved.

As stated in their white paper, VeChain believes blockchain technology has the potential to address “this asymmetric information problem” and “allow ownership of data to return to and empower its owner.” It is hypothesised that the VeChain platform will increase market transparency by providing authorised stakeholders with complete visibility into the lifecycle of a product, including its storage, transit, and distribution.

Examples of How VeChain Can be Used

The platform could be used to track medicine packs or alcohol bottles from the time they are made to the time they are delivered to the customer, including checking on their quality, authenticity, storage temperature, transportation medium, and last-mile delivery. This can happen at any point along the supply chain, from the factory to the consumer’s front door.

To this end, VeChain employs smart chips—also known as Radio Frequency Identification (RFID) tags—and sensors. These gadgets upload crucial data to the blockchain network, where it may be accessed in real time by approved parties.

With the use of sensors, we can keep an eye on all the product’s parameters in real time and report any problems directly to the people who need to know about them. Both the manufacturer and the client are informed if a pharmaceutical packet is stored at an unacceptable temperature. This paves the way for better quality control and enhanced customer service.

By way of a second scenario, the VeChain platform can enable car owners to keep the data connected with their vehicles in their possession and use it to better negotiate terms and coverage with their insurance companies.

VeChain’s Initial Steps

VeChain was founded in 2015 by Sunny Lu, a former chief information officer (CIO) for Louis Vuitton China. One of the few blockchains with a substantial customer base among established organisations, it was formerly a subsidiary of Bitse, one of the biggest blockchain firms in China.

When it was released, the VEN token was built specifically for use on the Ethereum platform. Successfully relaunching in 2018, VeChain is now operating on its own blockchain. VeChainThor (VET) is the new name for the VEN blockchain, which was renamed as part of the process of changing its name.

The white paper on the VeChain blockchain system details the goals of the network. The original intent was to cause a commotion in the supply chain industry by making data more accessible and usable. Its long-term goal is to establish itself as the go-to platform for ICOs, dApps, and IoT intermediaries developed on the VeChain blockchain.

VeChain has inked strategic agreements with a number of different organisations over the past few years to help them achieve this goal. To improve product verification and traceability, VeChain has partnered with PricewaterhouseCoopers (PwC) to offer the latter’s clientele access to VeChain’s blockchain-powered solutions.

Gui’an, an economic development zone administered by the Central Chinese Government, has selected VeChain as its official technology partner. In addition, VeChain has collaborated with Renault to create an immutable digital vehicle maintenance log. Microsoft and Viseo worked together on this book.

VeChain’s Distributed Ledger Technology

There is a public blockchain platform available called VeChainThor, and it is intended for “mass business adoption.” VET and VTHO are the two tokens included. The VET token is used on the VeChain network to transfer the “smart money” or value created by smart contracts. To rephrase, all decentralised application-related transactions on the VeChain network will require the VET token. Members of the public who are interested in investing can take part.

The VeChainThor Energy token (VTHO) was formerly known as VeThor Energy. It is used to fuel transactions on the VeChain network and represents the value of a transaction on the VeChain blockchain.

The concept is similar to Ethereum’s ether and NEO’s “gas” in that developers will have to reserve funds for a fixed number of underlying tokens (which will not be made available to the public) in order for their decentralised applications to process transactions. As stated in their white paper, VeChain designed the two-token system to provide decentralised application developers with a more stable economic model and to promote more effective governance.

The volatility of ether, Ethereum’s native gas token, means that the network does not yet have such a model. As a result, developers must guess at the amount of ether required for a given transaction. If their prediction turns out to be wrong, the deal will be scrapped. VeChain’s white paper details the various technical enhancements made to the platform to work around this problem.

Every single transaction on the VET blockchain, for instance, can make use of the Proof of Work (PoW) protocol. This means that, if necessary, the parties to a transaction can go out and mine for more VTHO in case their initial estimate was off.

Management Standards

In order to achieve consensus in the VeChainThor blockchain, the Proof of Authority protocol is implemented. According to this approach, votes are divided based on factors including VET holdings and openness. Token holders with 1 million tokens but no know-your-customer (KYC) credentials are responsible for 20% of all votes, while those with KYC and the same number of tokens are responsible for 30% of all votes.

There are 101 master nodes on the VeChain blockchain, and they all need to agree on the state of the network and all of the transactions. This method differs from Bitcoin in that not all nodes must approve a transaction before consensus can be reached.

It is forbidden for a node to hide its identity, and being transparent about one’s own identity is a prerequisite for becoming a master node. According to VeChain’s white paper, this system has no fixed minimum number of validators and has a low power footprint.

The second type of master node in VeChain is the economic master node. Instead of creating blocks or ledger records, these are used as a check on the power being used. This is accomplished by giving each economic master node a specific number of votes based on its VET holdings. Each economic master node receives one vote for every ten thousand VET it owns.

The usage of master nodes centralises voting power in an otherwise distributed system. The developers of VeChain, on the other hand, have publicly declared that they want to create a middle ground between centralised and decentralised governance with their protocol.

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