As dull as it sounds, supply chain management is actually quite an art. It involves handling inventory and supply operations to maximize customer value and using creative strategies to gain a competitive advantage.
In a nutshell, VeChain is a decentralized network where the supply chain meets blockchain. Supply chains may be boring, but they’re a fundamental element of our modern economy. You have to distribute products to sell them.
Small project, big vision
VeChain aims to streamline the processes and information flow involved in complex supply chains through its distributed ledger technology. Even small gains in efficiency can make a big difference in profits, and in the world of business, every bit counts.
From a product’s supply operations and storage temperatures to its authenticity and transportation medium, VeChain can track a variety of details about a product’s journey through the supply chain.
The VeChain whitepaper states that blockchain can break the “asymmetric information problem” and empower data ownership. By creating a trustless, distributed business ecosystem, VeChain allows for efficient collaboration, rapid transfers, and a transparent flow of information.
It can also create greater market transparency by providing authorized stakeholders with a detailed view of the information linked to a product and its associated business operations.
Cheap token, premium blockchain
VeChain started as a project on the Ethereum blockchain. Its VEN token was offered to the community in an ICO in 2017, raising 200,000 ETH or around $60 million in funding.
In 2018, when the project moved to its own blockchain, VEN tokens were exchanged for VET in a 1:100 ratio. In 2020 VET grew by almost 400%, with regular reports of new and substantial partnerships with VeChain in the supply chain arena.
While the VET token is only worth a few cents, VeChain is more valuable than its token implies. Since its main use-case comes from partnerships with organizations and large projects, much of VeChain’s value comes from its platform.
With more projects integrating with VeChainThor, handling data, and spending more VET and VTHO on the network, this could be an exciting asset to look out for.
Tangible products for intangible constructs
VeChain uses physical infrastructure like smart chips, RFID tags, and sensors to transmit important information to the blockchain. Through these sensors, the network can log and monitor an array of parameters relating to the product and convey them to relevant stakeholders.
For example, it can inform quality control if a batch of medicine was transported in an environment outside the recommended temperature range. It could also let car owners use driving data to negotiate better insurance policies.
The VeChain ecosystem utilizes two tokens – VET or VeChain Token and VTHO or VeChainThor Energy, the native token for the VeChainThor blockchain platform.
VeChainThor is a public blockchain for enterprise adoption, and it uses VET to transfer value and VTHO to power transactions. This two-token system keeps transaction fees in check and enables the network to scale up to 10,000 transactions per second.
Amateur industry, expert team
In 2015, Sunny Lu, once the CIO of Louis Vuitton China, founded VeChain as a subsidiary of one of China’s largest blockchain companies, Bitse. Despite being such a young project, VeChain already had a substantial customer base and partnerships with influential companies.
Today, VeChain has hundreds of team members employed in offices worldwide, including executives with experience in senior management positions at reputed firms like Deloitte, PwC, and Louis Vuitton.
Before VET, VeChain introduced the VEN token on the Ethereum blockchain as an ERC-20 token. By 2018, the project had raised funding through an ICO, transitioned to its VeChainThor blockchain platform, and launched the rebranded VET token.
In its endeavor to disrupt the supply chain industry, VeChain makes data accessible, actionable, and transparent. The project has plans to add support for DApps in the future and introduce ICOs on VeChain and IoT (Internet of Things) platforms.
A ‘we’ chain
Bitcoin requires every node to vote on a transaction before it can reach a consensus. This isn’t just slow; it’s a waste of valuable resources. To dodge this problem, VeChain uses 101 ‘masternodes’ responsible for achieving consensus to validate transactions.
To prevent malicious users from abusing the masternode system, identity disclosure is essential, and anonymous nodes are disallowed. VeChain claims that this system is not only less power-hungry, but it also doesn’t require a minimum number of validators to reach consensus.
Over the years, VeChain has made several strategic partnerships with large firms worldwide to help its platform grow. Among these names are accounting firm PricewaterhouseCoopers (PwC), which provide VeChain’s blockchain solution to its entire client base for improved product verification and traceability.
The project has also aligned with Chinese firm Jiangsu Electronics to develop custom RFID tags in tandem with its blockchain platform. French car manufacturer Renault is assisting with manufacturing operations, and the project also has a national level partnership with China for its Gui’an New Area economic-development zone.
The asymmetric information problem is one the logistics sector has been wrestling with for a while now. While there have been efforts to solve it, these systems cannot communicate that data in an optimal manner despite collecting massive amounts of data.
VeChain offers a solution that streamlines supply chain management, improves transparency, and mitigates delayed data transmission issues. The world will always rely on supply chains in one form or another, and VeChain’s impact on this industry could mean many things, not just for the cryptocurrency space but also for the world.
A chip off the old blockchain
While there aren’t too many projects in the space targeting the supply chain, it’s still a reasonably viable use-case and has been employed by other blockchain-based projects like WaltonChain, Wabi, and Ambrosus. However, VeChain has big plans for the future, and more than one trick up its sleeves.
A two token system may sound strange, but many other smart contract blockchains employ a form of this system too. For example, Ethereum uses ETH for both value transfer and gas fees.
However, having two tokens allows VeChain to budged for the number of tokens needed to conduct transactions and creates a predictable economic model for DApp developers. While the Ethereum network does pay for the cost of computation, its reliance on the single ETH token makes it much more volatile.
Recently, UK-based rapper Zuby unveiled a blockchain-themed collection of streetwear. The collection allegedly includes 300 items of clothing registered on the VeChain platform. Since the blockchain is immutable, buyers can verify the authenticity of their merchandise just by scanning a QR code.
The chain also has ‘economic masternodes’ that do not produce blocks or validate transactions. Instead, they are used as a check on power by allocating votes to each node according to its VET holdings (10,000 VET = 1 vote).
Further, VeChain has the advantage of its established client base with large companies and could lead the industry to new heights with its disruptive supply chain technology. Unlike many blockchain projects, VeChain knows what it wants to do, and it certainly knows how to do it.
Beyond creating a way for the fashion industry to benefit from blockchain technology, VeChain has actively promoted inventive use-cases to many other untapped markets.
In September 2020, fantasy authors Dave Morris and Jamie Thomson announced that they were writing a new fantasy trilogy titled “The Vulcan Verses.” The project was based on an upcoming Vulcan Forged NFT-powered collectibles game ‘Vulcan Forged’ and the decentralized online multiplayer game ‘VulcanVerse.’
Earlier in August, VeChain launched its blockchain-fueled sustainability solution for companies that want to digitize their sustainable practices. According to the announcement, VeChain claims the tool can verify a green supply chain and even store recycling and processing information.
Soon after, the project revealed its partnership with the accounting and consulting company Grant Thornton Cyprus which hopes to extend blockchain solutions to a variety of industries. The exact sectors will be determined from the firm’s customer network but could include food, pharmaceuticals, logistics, renewable energy, and even e-commerce.
As the team continues to create partnerships with large companies and deliver high-performance products, VeChain could influence industries in ways never before thought possible.