In our first installment of What the F Is…? we’re taking a look at VeChain Thor, which is simply last year’s rebranded name for VeChain. No idea what we’re talking about? Well, that’s what this series of articles is for, so read on!
First, I’d like to take you back a few years. I’m walking though the Brussels Christmas Market. It’s cold, but there’s no wind and the rain has decided to take a very welcome break for a few days. I’m a little short on cash, but I’m still looking to buy a few presents and maybe treat myself a little bit while at it.
That’s when I stumble on this perfume stall. There’s literally dozens of perfumes on sale, all of them for 5 euro and all of them with names and color reminiscent of more popular brands. I’m still on Cool Water, but I try out several different perfumes and they all smell quite like the original versions. I remember a narcissistic but not very rich friend of mine, Peter, recommending me this stuff, but still I hesitate. Can anything that’s being sold at 7 to 10% of the price of the original product be as good? Am I not hurting another business by buying a flask?
I end up buying 3 different perfumes, but I still don’t feel great about myself. I know I’ve just bought a fake. On the other hand, while the perfume bottles do reference other brands, the vendor in no way pretends to be selling exactly the same thing. It’s a different feeling than when I visited Tunesia with my then-girlfriend, one of my best friends and his father. At the village’s local marketplace, I refused to buy a handbag because it was a fake posing as the real thing.
In 2019, a report by the OECD and the EU’s Intellectual Property Office claimed that trade in counterfeit and pirated goods stood at 3.3% of all global trade – a figure that has risen at an alarming pace over the last few years. Trends in Trade in Counterfeit and Pirated Goods put the value of fake imported goods in 2016 at about 509 billion USD. The EU got hit especially hard, with 6.8% of all imports from outside Europe proven to be counterfeit – and that’s neither including products distributed though the internet, nor domestically-produced and consumed fake goods. Ouch.
It only makes sense that blockchain technology could feasibly help identify and track products, right?
Ironically, whilst the brunt of fake products discovered during custom checks hail from mainland China and Hong Kong (with the United Arab Emirates, Turkey, Singapore, Thailand and India trailing behind our Chinese brethren), it’s a Chinese guy who launched VeChain. That happened all the way back in 2015 – which is ages ago by cryptocurrency standards. The development even started in 2007, arguably making the man a visionary.
We’re talking about CEO Sunny Lu and, man, has this guy been around: he used to be CIO and COO of Louis Vuitton China, he co-founded the Chinese internet start-up which developed Quinn (a digital asset that’s used quite often in crypto space) and he’s currently in charge of 90+ employees and he’s even teamed up with Chief Technology Officer Gu Jianliang, who boasts about 19 years of experience with the mobile device and Internet of Things, and who has created 100+ patents in several technological areas.
Unlike bitcoin and similar currencies, the VeChain blockchain platform focuses on supply chain management, smart contracts and financial services. It’s designed to enhance supply chain management and streamline business processes through the use of distributed ledger technology (‘DLT’).
The possible uses are pretty clear: it’s able to provide a 360-degree view of information liked to a product and to its lifecycle, providing data on storage, transportation and supply to authorized stakeholders. In other words: VeChain can track things like authenticity, delivery, storage, quality, temperature and transportation.
Alas, VeChain isn’t magical, so it needs smart chips or Radio Frequency Identification (RFID) tags and sensors which broadcast important information to the blockchain network. This means, amongst many other things, that manufacturers and/or customers can be informed in real time if there’s a delay or if the required storage temperature is off. There’s a wide range of other applications as well, such as detecting counterfeit or allowing car owners to negotiate better terms wth insurance companies. Aside from the automobile industry, VeChain is already being used by agricultural companies, carbon emission reduction agencies, disaster recovery services, the fashion industry, food safety organizations and even wine distributors.
VeChain has two tokens:
Vechain Token (VET) is used to transfer value across VeChain’s network. This means transactions on decentralized applications use VET, which is also available to the general public as an investment opportunity.
VeChain Thor Energy (VTHO) pretty much works as the fuel that powers transactions. It’s equal to the cost of conducting transactions on the blockchain.
The two-token system has a clear purpose: to provide effective governance and a predictable economic model for decentralized applications developers. Those are properties blockchains like Ethereum currently lack, as the price of ether (its ‘gas’ token) is volatile and developers find themselves having to estimate the amount of ether needed for a transaction. If an estimation fails, the transaction fails. Which, obviously, sucks.
VeChain uses 101 Masternodes to reach consensus on transactions. According to its Proof of Authority protocol, votes are disbursed based on both VET holdings and KYC: voters with 1 million tokens, but without KYC, are assigned 20% of all votes, while voters with both 1 million tokens and KYC are assigned 30% of the votes. Anonymous nodes aren’t allowed, which should use less power than, for example bitcoin (which needs all nodes to vote before reaching consensus). It also doesn’t require a minimum number of validators, which should theoretically speed up the entire process. VeChain’s Blockchain-as-a-Service (‘Baas’) platform is called ToolChain and it’s fairly easy to deploy, which makes it a prime choice for many industries.
If VeChain also manages its further goals, such as integrating dApps and initial coin offerings (ICOs) on VeChain and high-level Internet of Things (IoT) integration, we might be looking at one of the more useful blockchains out there. It does seem to have some interesting partnerships going on, such as with accounting firm PricewaterhouseCoopers (PwC) and Jiangsu Electronics, which is developing RFID chips for automobile company Renault.
Of course, KryptoGeeks will report the latest news on VeChain as we go along. Watch these pages for more!