What is VeChain (VET) and how does it work? Everything you need to know

Blockchain technology has transformed numerous industries by offering secure, decentralized, and transparent platforms for data storage and transfer. VeChain, a blockchain network, has emerged as a popular option in recent years.

VeChain serves as a blockchain-driven supply chain management platform, striving to enhance transparency, traceability, and accountability across industries. This article delves into what VeChain entails, its operational mechanisms, and its potential applications across various sectors. Additionally, it explores the key features distinguishing VeChain as a unique and essential blockchain platform for businesses and organizations seeking to optimize supply chain management and overall efficiency.

What is VeChain?

VeChain (VET) is a blockchain network primarily dedicated to enhancing supply chain management operations. The protocol leverages tamper-proof distributed ledger technology to ensure the quality of its users' products. Utilizing blockchain infrastructure, VeChain facilitates secure transportation and storage of data for businesses.

At the core of VeChain lies its public blockchain known as VeChainThor, which actively monitors shipped goods within enterprise supply chains. This functionality grants VeChain practical applicability across various industries such as food and beverage, fashion, and automotive.

Established in 2015 by Sunny Lu, the former chief information officer of Louis Vuitton China, alongside Changpeng Zhao, VeChain initially operated on the Ethereum blockchain before rebranding to VeChainThor in 2018. This transition enabled VeChain to offer faster transaction speeds, increased scalability, and more customizable smart contract features. As a result, VeChain has broadened its collaborations and applications across diverse sectors including food and beverage, logistics, and pharmaceuticals.

Even prior to its official launch, VeChain had forged partnerships with several notable businesses, and it has since continued to expand its network. Presently, VeChain boasts partnerships with globally renowned companies such as UFC, BMW, PwC, DNV GL, and Microsoft.

How does VeChain work? 

VeChain utilizes a distinctive blockchain structure that merges a Proof of Authority (PoA) consensus mechanism with a multi-party payment protocol (MPP) and blockchain-as-a-service (BaaS) functionalities. Through the PoA consensus method, only authorized nodes validate network transactions, ensuring robust security and operational efficiency.

The MPP feature permits multiple parties to share the cost of a transaction, thus reducing transaction fees for individual users. Additionally, the BaaS feature empowers enterprises and organizations to develop their blockchain-based applications on the VeChain platform without necessitating internal blockchain expertise.

VeChain enables manufacturers to affix custom-designed tags to their products, typically through RFID, QR codes, or NFC technology. These tags or sensors gather data at various points along the supply chain, which is then securely stored and linked to the product's unique identifier.

Each product operating on the VeChainThor platform receives a distinct identifier known as VID, facilitating easy product identification and enabling tracking of ownership history. This data is utilized by the protocol to monitor quality, authenticity, and other relevant factors, accessible solely through the VeChain ToolChain software tool.

Utilizing blockchain technology ensures that the recorded data remains immutable, providing a reliable record of every event throughout the supply chain. In case of any discrepancies, such as misrouted items, the blockchain record accurately pinpoints where the error occurred.

VeChain apps across industries

VeChain offers diverse potential applications across various industries, including:

• Food safety: VeChain's blockchain can track and authenticate food products throughout the supply chain, reducing food fraud, minimizing waste, and bolstering consumer confidence in food safety.
• Logistics and transportation: VeChain's technology enables tracking and regulation of commodity movement across shipping, warehousing, distribution, and delivery, optimizing supply chains, cutting costs, and enhancing delivery efficiency.
• Pharmaceuticals: VeChain's blockchain verifies pharmaceutical products to ensure authenticity and validity, combating counterfeit and expired drugs, and enhancing patient safety.

These applications demonstrate VeChain's capacity to revolutionize supply chain management, delivering transparency, efficiency, and trust across various businesses.

What are VET and VTHO?

VeChainThor operates on a dual-token system comprising the primary cryptocurrency, VET, and a utility token, VTHO. While VET serves as a transactional and value-storage token, VTHO is primarily utilized to cover network transaction costs.

VET allows users to conduct transactions on the blockchain publicly, whereas VTHO is essential for executing transactions and interacting with the protocol. It ensures stable transaction fees, and as the demand for transactions increases, the price of VET may appreciate.

To write data on the blockchain, payment is required in VTHO, but VET ownership is necessary to generate VTHO. Presently, 1 VET generates 0.000432 VTHO per day, with the basic generation rate set to potentially increase in the future but never decrease.

In conclusion, VeChain presents a versatile array of applications, from validating product authenticity to enhancing food safety, optimizing logistics and transportation, ensuring pharmaceutical safety, and promoting sustainability. Through its partnerships with various enterprises and organizations, VeChain is enhancing transparency, efficiency, and trust in supply chain management.

As blockchain technology evolves and disrupts various industries, VeChain stands poised to emerge as a leading platform. Its innovative approach to supply chain management and dedication to providing practical solutions for businesses make it a platform worth monitoring in the coming years.