What is VeChain?

What is VeChain?

Luka
Luka VeChain

VeChain is definitely a project with many use cases in more than a few industries. Therefore, we are here to answer the question: What is VeChain?

Focused on Real World Application

VeChain is one of those blockchain projects that bases its advancement on the integration of the technology into already established systems.

To quote their official website: "VeChain aims to connect blockchain technology to the real world by providing a comprehensive governance structure, a robust economic model as well as advanced IoT (Internet of Things) integration, and pioneers in real-world applications."

VeChain is focused on real world use cases

Supply Chains Start

The development team, led by CEO Sunny Lu, started by utilizing blockchain to improve supply chains.

VeChain is a Supply Chain Solution
VeChain technology, through smart contracts, enables manufacturers to assign unique identities to products. This allows these manufacturers, supply chain partners, and consumers, to track the movement of products through their supply chain.

Therefore, the VeChain Foundation claims that their technology can be utilized for:

  • Liquor sales
  • Luxury goods
  • Cars
  • Retail
  • Agricultural uses
  • Logistics

VeChain is seen as the ideal supply chain track and trace Solution

Technicalities

Until the launch of VeChain Thor, VeChain, like most smart contract platforms, was dependable on Ethereum technology.

VeChain technical details

However, since the launch and the migration onto its native blockchain, VeChain, similar to NEO, has two cryptocurrencies running on the network. VeChain Token (VET) and VeThor (THOR) function as two different utility tokens.

VET: creation, and utilization of Apps on the platform
THOR: transaction fees payment method

Besides the highly marketed flexibility for real enterprise use, VeChain claims to have other differentiating factors:

  • Built-in governance tools
  • Proof-of-Authority
  • Cryptocurrency Disaster Recovery Plan (CDRP)
  • High scalability and sidechain capability

Built-In Governance

Participants in many ongoing debates proclaim that VeChain has a higher degree of centralization than is desired by the libertarian crypto community.

VeChain Centralized
What VeChain is looking to explain instead of getting involved in endless discussions is that their governance is important to ensure the security of the network, making it truly useful for business and real market solutions.

Furthermore, the built-in governance is a pivotal point of importance for the consensus mechanism used by the VeChain ecosystem: Proof-of-Authority (PoA).

VeChain is slightly more centralized but therefore more useful for business

Proof-of-Authority

Proof-of-Authority is a consensus reaching mechanism which uses Proof-of-Stake (PoS) to stake identity rather than coins in wallets.

So what does that mean?

That means that a pre-chosen group of individuals holding the nodes (validators), usually those who want to utilize blockchain for their business, secures the network and its functionality.

The number of validators should be kept fairly small (preferably less than 25) in order to ensure the efficiency and flexible security of the network.

What is VeChain gaining with Proof-of-Authority?

Simply put, the credibility of the platform!

For example, say Jack Daniels wants to utilize VeChain's blockchain technology to ensure that their consumers are able to confirm that the product they're buying is genuine.

By becoming exclusive validators of the network through Proof-of-Authority, Jack Daniels can ensure that the system functions as it is meant to, without any 3rd parties.

Proof of Authority (PoA) puts the power into the hands of businesses

Disaster Recovery Plan

VeChain is the first blockchain-based platform to devise a Cryptocurrency Disaster Recovery Plan (CDRP).

According to their official Medium channel:

"the Foundation has defined different types of threat scenarios based on their severity and likelihood, and corresponding controls and procedures to protect the crypto assets from those threats."

That way VeChain is able to enhance the security of the system as well as comply with strict regulations.

VeChain's disaster recovery plan
VeChain's CDRP differentiates three levels of threats which differ by the level of risk:

Adverse Event (low risk)

  • Password losses.
  • Malware in the network.
  • etc.

Security Incident (medium risk)

  • Unauthorized use of system privileges or access to sensitive data in the network.
  • Hardware damage to the computer or USB drive that stores the keystore files.
  • etc.

Private Key Compromise (high risk)

  • The compromise of the private key or keystore file that will cause a significant direct impact on the security and integrity of digital wallets or private keys.

By having a functioning CDRP, and enthusiasts say that VeCahin took a huge step forward when security is concerned, and set the higher standard for all other blockchain projects.

VeChain's CDRP is a unique feature in the blockchain industry

High Scalability and Sidechain Capability

The VeChain Foundation claims that, by pure design, the VeChain system can scale up to 10,000 TPS (Transactions Per Second), which, by itself, is a highly respectable number.

VeChain Scaleability
However, the real scalability of the network comes from another technological angle.

Having no mining involved, and using the PoA consensus mechanism, Vechain can scale much more, depending on what hardware validators' nodes run on.

Better hardware will provide more scalability.

Sidechain capability, which is scheduled for Q4, 2018, gives VeChain a slight touch for the future.

As was already described in our article about Cardano, sidechains can enable a blockchain to interact with other blockchains, and even be complementary with the traditional financial system.

VeChain seems to be highly scaleable and has sidechain capability to interact with other systems in the future

Regulatory Compliance and Partnerships

Regulatory compliance is one of the main selling points for any enterprise-focused product, and VeChain praises itself to be the one of the most regulatory compliant blockchain projects in the industry.

Receiving the green light from the likes of China, which is notorious for its enhanced scrutiny on cryptocurrencies, makes a statement for itself.

VeChain partnerships
That being said, it is only natural that VeChain is involved in many partnerships and collaborations with companies who want to improve their business by using the blockchain technology.

The list of partnerships VeChain has accumulated is formidable:

  • DNV GL
  • PriceWaterhouseCoopers (PwC)
  • National Research Consulting Center (NRCC)
  • Yida China Holdings Limited
  • BitOcean
  • Direct Imported Goods (D.I.G)
  • China Unicom
  • Kuehne & Nagel
  • DB Schenker
  • BMW Group
  • LVMH (Moët Hennessy Louis Vuitton)
  • Groupe Renault
  • Bright Food
  • NTT Docomo
  • People’s Insurance Company of China (PICC)
  • BYD

The Future

Blockchain seems to be penetrating all branches of business and VeChain is one of the platforms spearheading the "attack".

Sometimes pioneers live up to expectations to become industry's giants.

Sometimes they stagnate by not improving their product and remain in mediocrity until they eventually fade away.

It is still too early to say which way VeChain is going to go, but, considering the fact that the project was in the ICO phase a year ago, one thing is certain: they have already delivered a lot.