What is VeChain?
Based in Singapore, VeChain aims to disrupt the supply chain industry with the process of “asset digitization”. With a vision to create greater market transparency on the supply chain, all components are recorded and securely stored with the combination of RFID/NFC tags and the immutability of a distributed blockchain.
VeChain has developed an enterprise software platform to accomplish this goal. The platform allows products to be assigned a VeChain Identity, or VID, for tracking purposes. This will be attached directly to the product as a QR Code, RFID, or Near Field Communication (NFC) tag. The VID technology writes the identifying information directly onto the blockchain simultaneously. Manufacturers, supply chain participants and consumers can track a product from the manufacturing point to shipment and delivery. All entities involved can receive private keys. This makes all attempts to commit fraud, such as counterfeiting and brand theft, easily detectable.
VeChain recently introduced new development plans in the form of its own blockchain. Attempting to extend beyond just the supply chain, VeChain is moving to more of a decentralized application model. VeChain will be split into two different currencies with separate functions to create this new ecosystem.
“VET is to serve as the intermedium of value, or in other words, smart payment currency, to enable rapid value circulation within the ecosystem based on the VeChain Blockchain.”
Users will have the opportunity to swap their VEN for VET at a 1:1 ratio when the new blockchain goes live. Holders of VET will be given a higher priority when it comes to activities on the new blockchain compared to those that hold less VET.
“THOR Power represents the underlying cost of using the VeChain Blockchain and will be consumed (proportionally burnt) after certain blockchain operations are performed, such as transferring VET and executing smart contracts.”
When users hold VET, they will receive dividends of THOR. Similar to having to spend GAS to run computational work on chain, THOR will most likely be used by businesses as payment to run applications on the new blockchain. Decoupling the assets provides more flexibility.
Using the Ethereum blockchain as their base, VeChain has made changes that align with their use-cases more closely, with a heavier focus on business applications. Using a Proof of Authority (PoA) consensus algorithm, there are nodes and masternodes in play. Nodes receive THOR as a reward for maintaining the network with a system of four node types in place. Depending on the maturity date and amount of VET the node holds, it will be classified as one of four: Strength, Thunder, Mjolnir, Thrudheim. All nodes are entitled to one vote each in key decisions, such as electing members to the board running VeChain or deciding on changes to consensus.
A tier based system allows those who own a large amount of VET to earn THOR at a faster rate. This is slightly different and unique when it comes to other consensus models. We have yet to see if this is sustainable from a decentralization viewpoint. Paired with company ownership of the VeChain blockchain, it is important to not view the token as a decentralized cryptocurrency. This does not dilute the value of the ecosystem and price of the native currencies.
The vision of this change in development for VeChain is to build a distributed business ecosystem. While similar systems exist, such as Ethereum and NEO, they leave a lot of the work to the developers and companies themselves when creating tokens and applications. VeChain has an expansive list of partners to start this process and develop decentralized applications primarily though the VeChain Foundation.
The VeChain Foundation is a nonprofit that was established in July 2017 in Singapore. The foundation is the sponsor entity for the VeChain network. It plays an important role in business development and supports partnerships with enterprises that are interested in leveraging blockchain technology as a service. As of now there are partnerships featuring a host of major companies around the world, including well known names like Microsoft, PricewaterhouseCooper, Hyperledger and most recently BMW.
With the foundation at its back, VeChain is positioning themselves as more than a solution to supply chain management. A growing list of partnerships and strides in development give VeChain a major competitive advantage in becoming an all-in-one business solution built on blockchain technology.
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