Throughout history, developers have found multiple valuable applications of the fundamental qualities of blockchain technology, such as automation, transparency, immutability, and decentralization. However, it may become difficult for businesses to completely utilize the benefits of blockchain technology because of the cost required to maintain these applications.
Moreover, the struggle to enter the crypto market has been lessened by the use of distributed ledgers by blockchain technology. One platform developed to increase the use of blockchain technology is VeChain.
It is a blockchain operated through smart contracts created to increase the supply chain phenomenon and encourage the masses to adopt blockchain technology more frequently.
All the supply chain organizations were facing significant issues, which were a lack of transparency and the involvement of a third party in carrying out transactions. These issues have been resolved by blockchain technology to a certain extent. It has allowed the integration of logistic and financial services to facilitate data sharing between stakeholders.
In this guide article, we will explain the concept and working of VeChain Technology (VET), its fundamental characteristics, and the benefits it can provide to users.
What is VeChain (VET)?
The VeChainThor (VET) is a public blockchain developed to provide adoption facilities to all firms so that they can act as building blocks for a vast blockchain ecosystem. Although Ethereum has proved itself an essential medium in history, VeChain still considers it an unsuitable match for decentralized commercial applications (dApps) running on a large scale.
This is because, in case of any breakthrough or sudden issue, Ethereum is still not able to solve them immediately due to a lack of proper governance protocols. Moreover, it becomes difficult to operate Ethereum at an affordable and reasonable cost as the Ethereum blockchain network lacks an appropriate economic model.
In addition, companies might hesitate to use the Ethereum blockchain network for their decentralized applications in the future because of the volatile nature of Ether.
However, all these issues of the Ethereum network are resolved by the VeChainThor (VET) as it provides the users with a proper governance mechanism operated on-chain, a two-token system, the Proof of Authority consensus mechanism and multiple transaction features.
History Of VeChain
The VeChain network was founded in 2015 by Sunny Lu, the former chief of information at Louis Vuitton China, along with the founder of Binance Changpeng Zhao. It was developed as a subordinate to Bitse, responsible for providing solutions based on blockchain.
Initially, the Ethereum platform was used by the VEN token to operate properly, but then the token shifted to VeChain blockchain in 2018. It then emerged as the VeChainThor blockchain network in the crypto space. The VeChain network aims to disrupt the supply chain technology through the transparent nature it provides to the network.
There are several companies that have collaborated with the VeChain network that, included Volkswagen, Renault, BMW, PWC, and Microsoft. These businesses increased their operations in the market by integrating the unique features of the VeChain blockchain network.
Important Features of VeChain
A few significant features of VeChainThor (VET) are discussed below.
The meta-transaction features of VeChain make it possible for companies to adopt them quickly, making it a convenient technology for traders. These features are elaborated on below.
- Payment from Multiple Parties: A scheme that provides a flexible transaction fee to its users is provided by the freemium model of the decentralized application. A company can own a smart contract and an approved gas account via the delegation protocol of VeChain to manage all the charges required to operate the network.
- Lifecycle of Controllable Transactions: If any transaction is not included in the Block reference or Expiration transaction fields, the users have the authority to set the timing of expiry or execution of that particular transaction.
- Multiple Tasks During Transactions: The user can include various contracts and calls or perform batch payments while carrying out a transaction. Moreover, they can also control the order in which calls are received by using this feature.
- Dependency on Transactions: To stop any transaction from being completed, the user can set the dependence of that transaction. It is done until the execution order is satisfied and the transaction process gets completed.
- Proof of Authority Consensus Protocol
Enterprises facing the problems such as wastage of energy and ineffective upgrades usually use the Proof of Authority (PoA) protocol to address them. The reasons for the efficiency of the PoA consensus mechanism are discussed below.
- In case the Authority Master nodes are not updated, the built-in smart contract features help in providing a barrier against hard forks.
- Relatively lesser computation power is needed to achieve the network’s security and integrity in the consensus mechanism.
- All of the Authority Master nodes are verified thoroughly using a foundation.
- Governance Model
A Steering Committee is elected by the community responsible for looking after all activities in the VeChain space. This committee takes all the decisions and ensures that they are carried out properly, abiding by all the rules of the governance mechanism from proposing to getting approved and then execution.
As voting in such mechanisms is based on roles, it eliminates the uncertainty that may arise due to lesser technical and organizational development.
- Dual Token System
The VeChain Token (VET) and VeChainThor Energy (VTHO) are two tokens in the VeChain token system. The VTHO token is created by using the VET token. Moreover, the users can transfer remittances and make payments to other VeChain users by using these tokens.
The cost required for developing smart contracts, the gas fee of the network, and the transaction charges are all covered using the VTHO token.
Working of VeChain (VET)
A network of almost 101 Authority Master node operators is used in integration with the proof of authority protocol on the platform to secure all the transactions carried out on the blockchain network. While abiding by the governance rules of the VeChain network, smart contract operations are carried out by these operators.
The user has to undergo a thorough Know Your Customer (KYC) check as directed by the Steering Committee of the protocol. In this way, the business or the individual can contribute towards the growth of the protocol.
Moreover, to protect the firm from the excessive volatility of the crypto market and speculation, the two-token system can be used so that the users can be sure of the market prices they are trading.
Firms of almost every size can collaborate to develop new products and services using the VeChain toolchain offered by the VeChain network. The VeChain toolchain provides different services, such as blockchain-as-a-service (BaaS), software-as-a-service (SaaS), and platform-as-a-service (PaaS).
These services help the customers to implement advanced strategies for the generation of value for prominent stakeholders in the market, to provide transparency to the system, and to get the correct information about the life cycle of any product.
Users do not need to build their applications from a new level; instead, they can use the built-in tools and design different templates by using the PaaS feature of the VeChain network. Moreover, the food and beverage industry can benefit from the Food Safety Track and Trace SaaS.
It helps them to deploy accessible tracing features such as providing certificates for quality and increasing the reputation of a brand by communicating correctly.
Moreover, standard smart contract services can be offered by using a restful application programming interface (API) through the BaaS feature of VeChain. Online information can be safely exchanged between the two computers using these APIs. About 70% of all the transaction charges are burnt, and the rest 30% are provided to the operators of the Master node.
It facilitates decreasing the circulating supply in VeChain tokenomics. Moreover, a sustainable reward is offered by the VeChain blockchain network to owners of the nodes.
Method to Buy VeChain
First of all, choose a crypto exchange according to the administrative boundaries that are supported by VeChain (VET) cryptocurrency. Moreover, to store the tokens buy a wallet too. However, the users can also use an exchange wallet to store the tokens. The Thor wallet has been introduced by the VeChain network, where users can store their crypto assets on all mobile phones.
On the other hand, the wallets like MetaMask cannot be used to store the VeChain tokens as they do not operate on the Ethereum network. The user has to transfer VET tokens with their desired amount and then keep them safe in their wallets. Customers can follow the below steps to buy VeChain tokens on the Binance platform.
- First, the user has to sign up for an account on the platform after the verification of his identity. For this purpose, he can use his phone number, email, or the Binance application to get registered.
- After that, choose the Buy Crypto link at the top of the Binance website in the navigation bar to purchase the required VeChain token. The user is given multiple options such as bank deposits, credit cards, debit cards, peer-to-peer services, or bank deposits to make the payment.
- After thoroughly checking the current market price, the next step is to confirm the order.
- After buying the tokens, it is upon the buyer that transfers them to his crypto wallet or holds them on the Binance account. Moreover, he can earn passive income through these tokens by staking them on the platform or exchanging them with other currencies.
Therefore, these VeChain tokens also allow traders to earn income passively. If a trader has bought Bitcoin initially, he can exchange it with VeChain tokens by looking for an exchange platform or wallet that facilitates VET staking.
As there are staking pools while dealing with other crypto assets, it is not the case here, and the user can integrate the VeChain to earn VTHO tokens further.
Are Nonfungible Tokens Involved in VeChain?
The VeChain blockchain network also provides a substantial collection of nonfungible tokens along with several applications in supply chain management. The network possesses a decentralized place for nonfungible tokens known as VeSea, where the users can trade and create the VIP-181 tokens integrated with the VeChain platform.
The VIP-181 tokens Standard was introduced by the VeChain Foundation, which facilitates the tokens to function while operating with smart contracts. Moreover, to sell, buy or store nonfungible tokens compatible with VeChainThor Wallet and VeChain Sync 2 on VeSea, the users require a wallet compatible with the VeChain network.
In addition, there are no gas expenses integrated with VeSea because of the VeChain blockchain network. However, a minimal fee of 2.5% has to be paid by the users. There are two types of NFT collections offered by VeChain that are Paper Project and VeKings.
The VeKing series of nonfungible tokens consist of almost 8,174 pieces of art that symbolize the enormous VeChain kingdom through Valkyries and Vikings.
Similarly, the Paper Project was created by an artist, Emmet Ahlstrom, based in California. It also consists of about 11,880 nonfungible tokens that were designed uniquely. The VeChain network offers an exclusive discount to all customers who own any of the tokens in these NFT collections.
In addition, another marketplace to trade VeChain tokens is the World of V. this marketplace is free and accessible to everyone and is compatible with the Sync 2 wallet.
Moreover, the platform is launching new and advanced projects using its launchpad and offering the traders complete minting support. Also, the owners of nonfungible tokens are allowed to stake their tokens in the space provided by the creators.
Is it a Good Decision to Invest in VeChain?
The main aim of the VeChain blockchain network is to address the problems the previously developed blockchain networks face, such as high charges and lack of security, etc., and encourage the users to adopt blockchain technology in bulk.
Although the VeChain network has enormous applications in all industries and supply chain management, it is entirely upon the trader whether he opts for it. Moreover, the tendency of traders to cope with risk factors and their financial goals also decides if they should shift towards VeChain.
In addition, one can lose all his funds if he opts for any crypto asset he is not confident about. Therefore, the traders are advised to calculate theoretically the return they expect from a particular investment before allocating their assets to the blockchain network.
However, traders should be confident about the security that the VeChain network provides to its customers as it operates in integration with multiple reputable security companies.
These may include HackenProof, SlowMist, Secureware, Hosho, etc. These companies are proactive in their function and are always keen to find any illicit activity or cybercrime across the blockchain network and take immediate action against it.
Is it Possible to Mine VeChain Tokens?
As the consensus mechanism operating the VeChain network is proof of authority (PoA), it is impossible to mine VeChain tokens. The most prominent participants in mining any token are the validators involved in the network; however, there are very few computer systems available over the network to validate and operate the network; therefore, mining becomes impossible.
Risks Involved in VeChain
Although VeChain is striving to tackle the issues of previous blockchain technologies such as transparency, decentralization, security, etc. However, the VeChain technology is not a completely decentralized one. It operates on a proof of authority consensus mechanism usually run by a group of certain validators that facilitate transactions correctly.
Therefore, if anyone decides to trade with the VeChain blockchain technology, he needs to put his trust in the VeChain foundation operating it and know that he cannot solely control all the operations on the blockchain network.
There are certain flaws attached to VeChain, along with the benefits it provides to traders being a business-based network. The user must know that as a new network, it is still striving to improve and offer better opportunities to its customers; however, the incentives provided to the customers are relatively lesser than other blockchain networks.
What is the Future of VeChain?
VeChain is the layer-1 platform that allows different developers to create various applications and smart contracts over it. Different businesses can enhance their operations by integrating the VeChain network in other industries, logistics, and supply chain management. However, it is always advised to look at the benefits and flaws of any network before making final decisions.
Moreover, no one can predict anything about the exact future of VeChain technology. No one can tell that the users will adapt to VeChain the same way as they became used to the Ethereum network. However, the experts and traders are keen to look at what the future holds for VeChain and how it competes with other blockchains in the space by its distinct characteristics.
VeChain is a unique blockchain network created to make supply chain management convenient and easier for users. It uses distributed ledger technology to provide an easy pathway for the data and information to flow. The network is encouraging more people to shift towards a blockchain network by creating a trust-free, transparent, and high-speed network for them.