VeChain Review 2021 (VET) – Insane Long-Term Potential

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When it comes to cryptocurrency and blockchain and its potential usage, many eyes on the financial service industry, an area that is projected to be $26.5 trillion by 2022, while this is indeed a very lucrative area for blockchain and dapps to enter and completely disrupt, there is another industry sector that is also slowly feeling the effects.

We are talking, of course, about the supply chain and logistics industry of goods and products.  According to the World Trade Organization (WTO), in 2018, this sector was valued at $39.7 trillion ($20.8 trillion for all exports; $18.8 trillion for all imports)!  In particular, one project has been rapidly entering this gargantuan market and is already causing such a fuss that many people and enterprises are beginning to wake up to its massive potential.  That project would be VeChain.

Vechain review

Launched in Singapore, this seemingly little project has been rapidly expanding over the last few years, partnering up with some of the biggest names out there that supply the world with many goods and products.  This VeChain review article will look at what is causing such a disruption in the supply chain sector and why its blockchain has other use cases.

We will also take a look at its tokens, VET and Vtho, its governance, what sort of partners it has signed up with, what makes this project so unique that many industries are rapidly gaining interest in it, where it is going, and most importantly, whether you should have some VET in your portfolio.

What is VeChain & What are its features?

VeChain is a blockchain as a service company that has supply chain management solutions for enterprises.  It utilizes the Internet of Things (IoT) and blockchain technology to develop tools for tracking and providing proof of authentication for goods and products being traded.  It seeks to eliminate the billions of dollars lost every year due to counterfeiting.

To succeed in this, all goods and products will be tagged with their own unique code to be tracked throughout the blockchain, throughout its entire journey and life.  This means that retailers, customers, suppliers, just about anyone will be able to know where, how, and when a good was made, how it was transported, who or what enterprise was responsible, when did it arrive at its destination, etc.  Essentially, everything in a completely transparent manner. However, VeChain is much more than just helping streamline the supply chain.

The VeChainThor blockchain can also be utilized for a wide variety of other reasons.  Much like Ethereum, the VeChainThor blockchain has been specifically built to allow developers and users to build their own dapps and ecosystem on top of it.

Companies such as Vulcanverse, a virtual online game set in the Roman-Greco era, Vimworld, a blockchain-powered smart collectibles (Non-fungible tokens or NFTs) platform, and ecosystem and Jur, a legal decentralized platform that offers enterprises easy access and transparent legal dispute resolutions, among others, have utilized VeChain's blockchain to build their ecosystems.

VeChain was first launched back in 2015 on the Ethereum platform.  Its original token was VEN.  However, on June 30, 2018, it rebranded itself to VeChainThor and moved its entire ecosystem from Ethereum to its own independent blockchain.  We will discuss VeChain's tokenomics below, but it needs to be worth mentioning that VEN is an ERC20-token and is NOT compatible with VeChain's new blockchain and vise-versa (VET is VIP180).  Hence, users who buy VEN and transfer them to VeChainThor's mobile wallet or Sync addresses will lose them!

VeChain Foundation

The VeChain Foundation, a non-profit organization that is based in Singapore.  It was set up in 2017, and it is currently the governing body that oversees the entire ecosystem.  It seeks to create a trust-free, cost-efficient ecosystem where information is transparent and easily available.

Governance Model

VeChain is unique.  While its blockchain and statistics are completely transparent, it has a centralized governing system.  This was intentional.  VeChain realized that both decentralization and centralization have their advantages and disadvantages.  In their own Whitepaper 2.0:

“Although decentralization is the well-known cornerstone of blockchain technology, it has obvious defects leading to inefficiency and poor capacity to conduct fast iterations in its pure form. We believe scalability issues relating to blockchain are not linked to technical problems but consensus concerns of governance.

Continuous updates and additions to the features and functions of blockchain are a natural product of the evolution of the technology, its use cases, and its applications.”

VeChain came up with a governance model that served to be highly flexible and efficient in decision making.  However, that is not to say that there was never room for improvement.  In early 2020, to make their governance model more robust and effective, as well as more decentralized, they published their Whitepaper 2.0, which outlined certain changes.  You can get a better picture by viewing the governance model chart below.

We will not go over everything, but here is a bit of an overview.

Board of Steering Committee

It is the governing body of the VeChain Foundation.  It is selected by Stakeholders with voting authority.  The Steering Committee lays out the critical strategies and selects functional committee chairs to oversee the Foundation's operational units.  However, serious issues that could have a serious impact on all Stakeholders are voted on by the Stakeholders themselves.

Stakeholders

Stakeholders with voting authority can be any individual, corporation, government agency, non-profit organization with a stake in the VeChain ecosystem.  They are comprised of three categories:

Authority Masternodes: They are the network maintainers of the VeChain blockchain.  Each Authority Masternode or AM must hold at least 25 million VET tokens to become eligible.  On December 16, 2020, it was announced that Grant Thornton Cyprus, one of the largest business advisory firms in Cyprus with a business network in over 140 countries, became VeChainThor's newest Authority Masternode.

These nodes are the only ones that can pack new blocks on the blockchain and are rewarded by 30% of the transaction fee in each block.  While anyone can become an AM, a person or organization must go through an ID verification and background check and be approved by the VeChain Foundation beforehand.

Economic X Nodes:  Another group that has voting authority, but unlike Authority Masternodes, are not eligible to pack new blocks on the blockchain.  They were instead created as an electoral countermeasure against Authority Masternodes, although that does not mean that Economic X Nodes are supposed to, by default, go against everything the Authority Masternodes do.  This group was created as a one-time deal to reward any early VeChain investor.

This means that the amount of people that volunteered to become an Economix X Node is now locked.  While nodes can leave from this category without issue, VeChain does not allow anyone to come into this group.  So, if everyone decides to leave, then this category would be disbanded.  Each node is required to stake a certain amount of VET and wait for the maturity period.

Economic Nodes:  Unlike the Economic X Nodes, any VET holder, even now, can become an Economic node at any time.  Any VET address above the minimum holding requirement can apply via the VeChainThor Node smart contract and wait for the maturity period before the creation or upgrade is completed. More information about the Economic Nodes can be found here.

VeVote

VeChain also has a VeVote system for any other non-node VET token holder to vote on other issues, allowing for greater democratization and participation.

Proof of Authority Consensus Algorithm

Unlike other common forms of consensus algorithms such as Proof-of-Work (PoW) or Proof-of-Stake (PoS), VeChain employs a unique consensus called Proof-of-Authority, or PoA to generate new blocks.  What is that?  It is an improvement from the PoS algorithm in that anyone wanting to be an Authority Masternode must be validated and approved by the VeChain foundation first before they are eligible to generate new blocks on the VeChainThor blockchain.  This eliminates the risks of having anonymous block producers, one of the key barriers given by enterprises.

Because all AM nodes can be trusted, blocks can be packed much faster and is more cost-efficient than PoW or PoS.  AM nodes disclose their identity and stake their money and reputation for the right to produce new blocks.

However, at present, the VeChain Foundation has decided not to yet disclose the identity of some of the early AM nodes for the time being.  However, the Foundation does encourage new Masternodes applicants to disclose their identities, as was the case with Grant Thornton Cyprus, who came VeChain's newest Authority Masternode in 2020.

Tokenomics and NFTs

VeChain is also unique in that it has not one but two tokens.  The first token is VET, and it is the ecosystem's store of value and smart currency.  Its other token, Vtho, is generated when a user buys and holds on to some VET.  Vtho is smiliar to Ethereum's Eth token in that it is needed as ‘gas' to generate smart contracts and transactions on the blockchain.

Because of Ethereum's constant congestion and high-cost fees, VeChain developed two tokens to combat just that and more.  As stated in their whitepaper, while VET bears the brunt of price volatility in the market, Vtho was created to act more as a stablecoin to prevent transaction fees from being directly affected by such price volatility.

Therefore, users holding VET will receive free Vtho (yes, free tokens!) in their hot or cold wallet, which they can use to interact and conduct their business on the blockchain free of charge.  The more VET one has, the faster Vtho is generated.

VeChain has two token standards.  The first is the VIP180 Standard, which is a set of common APIs that all tokens, not just VET or Vtho, on the VeChainThor blockchain can follow and interact on.  It is similar to Ethereum's ERC-20 standard.  The second standard is VIP181.  This standard sets a common API for all non-fungible tokens (NFTs) to follow on the blockchain.  Again, it is based on Ethereum's ERC-721 NFT standard tokens.

This again must be stated for all newcomers: VeChain's VIP180 and VIP181 tokens are incompatible with the Ethereum blockchain or any other blockchain at the moment.  Under no circumstances should any VIP180 and/or VIP181 tokens be transferred to Ethereum and vise versa.  You will lose them!

Clients and Partnerships

VeChain has been acquiring partnerships left, right, and center within the last few years to put it simply.  Among the partners, VeChain has signed on includes giant corporations such as Walmart China, BMW Group, H&M, PriceWaterhouseCoopers (PwC), DNV GL, Shanghai Gas, among many more, and it doesn't look like VeChain is going to stop signing up more enterprises anytime soon.

On Twitter, a tweet was circulated showing the CEO of VeChain, Sunny Lu, speaking about a new enterpise that is ready to be on board.  It is expected that this enterprise alone is supposed to generate millions of transactions per day!  When writing this article, only a few hundred thousands of transactions or so are being generated per day.   According to the tweet video, VeChain's current scalability is not sufficient to meet this enterprise's needs.  This is probably the main reason why VeChain's PoA consensus algorithm is being improved to PoA 2.0.

Upgrades/Improved Features

For the past year or so, VeChain has been working hard on two major and significant upgrades to its ecosystem. The first upgrade is on its consensus algorithm, titled PoA 2.0.  The second upgrade is its Fee-Delegation as a Service (DaaS) feature.  The importance of these upgrades cannot be overstated, which is why this article will examine them a bit further.

Proof-of-Authority (PoA) 2.0-Surface

PoA 2.0-Surface, which stands for (Secure Use-case-adaptive Relatively Fork-free Approach of Chain Extension) is their new and improved consensus algorithm that is expected to be fully launched sometime in Q2 of 2021.  Without getting too technical, PoA 2.0 seeks to improve some of the disadvantages of PoA 1.0.

When a new block is created, time is spent on communication overheads (signatures, block header), transmitting a block, validating it, and reaching a consensus to elect the next node to generate a new block.  PoA 2.0 seeks to maximize the time spend on transmitting data and thus, improve bandwidth efficiency.  It does this by ‘delaying' the validation process from the generation of the block itself to the next round, allowing the transmission of data on the block to be run in parallel with the validation process.

Another improvement has to do with the time spent on electing the next node to generate a new block.  Instead, a schedule is randomly created well in advance to decide which order an Authority Masternode will generate the new block.

Finally, the PoA 2.0 has a relatively fork-free approach.  The new consensus algorithm introduces a verifiable random function (VRF) mechanism that allows blocks to be endorsed by a randomly selected number of smaller pools of nodes.  This curtails the power of the node that was selected to generate a new block and prevent him/her from committing malicious fork attacks.

Delegation as a Service (DaaS)

On January 15, 2021, CTO Dr. Peter Zhou published an article on Medium about a new fee delegation for VeChin, which is supposed to facilitate the interaction with defi (decentralized finance) protocols mass adoption to finally take place on the blockchain.

So, how does this new Delegation as a Service (DaaS) feature work?  In a nutshell, it is supposed to facilitate transaction payments.  One of the biggest obstacles in the Defi sector is the need to cover transaction costs.  This means users would have to buy certain tokens, in the case of VET for Vtho, to be able to interact on the VeChain blockchain ecosystem or any ecosystem for that matter.

This also entails having to learn and understand what a cryptocurrency is, especially a utility token, which blockchain does it pertain to, what a blockchain is, understanding how a transaction or smart contract work, having to find an appropriate wallet, and generating your private keys, understanding its risks, etc.  As you can see, something so simple just became overwhelming, complex, and confusing. To give an example, Brot KnoblauchHaus wrote an article that briefly and easily summarizes what DaaS is trying to solve.

“Fee delegation itself is easy enough to understand. We see examples of this every day in our real life. Think of a product like Office 365 . If you purchase a personal license for home use, you’re responsible for paying the license fee when it’s due. However, if you’re working for a company that has an enterprise deal for Office 365, you as an employee never have to worry about when the license payment is due and how much it costs. You just use the software.  This is fee delegation in a nutshell.”

He goes on with the same example:

“…now imagine if the company is using a variety of Microsoft products, not just Office. That’s a lot of different enterprise contracts that they need to maintain with Microsoft, with different pricing models, contract durations, and so on. This adds a huge deal of complexity, not just for the company who wants to use the Microsoft products but also to Microsoft themselves.

Here is the solution:

“This is where the Microsoft Authorized Resellers come in.

These are companies that procure enterprise licenses for various products from Microsoft in bulk and configure them in ways that suit the end customer's needs. So the end customer only receives one invoice from the reseller for all the Microsoft products they use. This greatly reduces the adoption barrier for Microsoft enterprise products.”

That is DaaS in a nutshell; it acts as a middle provider for both the vendor (dapp) and user, in which neither of them will ever have to deal with Vtho to generate any smart contracts between them.  A DaaS provider will do that for them, which will then invoice the bill to the dapp.

The fight against COVID-19

Another noteworthy piece of news is VeChain's initiative to tackle the fight against COVID-19.  In May of 2020, VeChain, along with I-Dante, teamed up to create E-HCart, a blockchain-based medical records app that serves to record all medical records and testing, including COVID-19 testing and vaccination of a patient right on the blockchain.

First tested by the Mediterranean Hospital of Cyprus, patients would have all their medical history information directly on their phone.  This not only greatly facilitates the transfer of medical information from one hospital to another but allows only the patient to have direct control over it.  Doctors will not be allowed to view them unless permitted by the patient.

In January 2021, the E-HCart app was expanded to be utilized by the Aretaeio Hospital in Cyprus.

Who is this product for?

Essentially, VeChainThor is for any person or enterprise that wants or needs to interact, send payment transactions, or initiate smart contracts on the blockchain fast, cheap and secure.

Whether you are a partner that utilizes VeChain's Toolchain for your supply/logistical needs, or a user who strongly believes in the success of the project and the problems it is trying to solve, or a developer who wants to build a dapp, dex, or other defi protocols on the blockchain, or even a user who wishes to interact with others through NFTs, the VeChainThor blockchain provides the robust, efficient, low cost and speed necessary to do essentially everything users do on the Ethereum platform.

To be able to do anything, one will need Vtho, which you can get by either holding VET tokens or buying Vtho on an exchange.  It would just be cheaper to buy VET and hodl it.

At the time of writing this article, a VET token is $0.02684, while the price of Vtho is at $0.001403.  While the price of VET is expected to go up with time, Vtho will remain relatively low in cost.

Tutorial/how to use/install a wallet/

Below are a few videos regarding VeChain, what it is about, and some of its features:

Below is a video about the VeChainThor Mobile Wallet:

The next video below explains how to transfer your VET tokens to your Nano Ledger (Please note that you will need to download a separate software, called Sync, then connect it to your ledger first)

The VeChain Team

VeChain was founded by Sunny Lu, current CEO and a former IT executive with 15 years experience, as well as former CIO of Louis Vuitton in China.  He has a solid intellectual background in computer science and network communication.  Having first-hand experience of the amount of counterfeiting of luxury goods, Sunny Lu initially started VeChain with the intention of tracking and authenticating them.  However, he soon expanded on that idea to include other goods and products.

Jay Zhang is co-founder and is the current CFO.  He has experienced working for PwC China and Deloitte UK (both now VeChain partners) as Senior Manager in Finance.  He brings with him many years of experience in risk management.

Dr. Peter Zhou is also another important member.  Graduated from the University of Southampton with a Ph.D. degree in Computer Vision and Gait Recognition, he is responsible for leading research and development on the blockchain.  He is also responsible for developing both the PoA 2.0 and Delegation as a Service (DaaS) feature upgrades.

Another team member is Jianliang Gu, the Partner Chief Technology Officer.  He graduated from Shanghai University with a master's degree in Cybernetics.  Jianliang has over 16 years' experience in both hardware and software embedded system development and IT management.

For more information about the team, please click here.

What makes VeChain appealing to users and potential investors is how involved the VeChain Team is on social media with the community.  Sunny Lu and Dr. Peter Zhou, in particular, have been active on Twitter and informing the VeChain community, whenever they can, about any updates in partnerships, upgrades in its features, etc.  This is unique and in deep contrast to other crypto projects whose team provides very little if any, information about the project itself.  A community in those other projects has often had to wait for months to get even the slightest piece of information or news.

The VeChain Community

VeChain has a large, passionate, and dedicated community.  A lot of what they do is not only to spread any new piece of information or update about the project through either YouTube and/or Twitter but have also provided analytical theories about where the project could go and what role it can play in the future.

While some of this analysis is speculation, its authors have provided rational explanations, if not also evidence, to justify their claims.  Indeed, on almost a daily basis, new information is released/found and then circulated throughout the community, providing a constant reminder as to VeChain's massive potential.  Any newcomer wishing to find more information about VeChain will have little trouble finding videos or tweets about it.

VeChain Competitors

It should be noted that VeChain is not alone in attempting to enter the supply chain market.  There are many other cryptocurrency projects and centralized corporations that utilize blockchain technology to enter this sector.  Some of the more well-known ones are:

  • Provenance
  • Waltonchain
  • IBM
  • FoodLogiQ
  • Hedera Hashgraph

 

While some of these competitors have been making strides, few have accumulated as many partnerships as VeChain.  However, that is not to say that VeChain will have an easy run.  After all, some companies are not too keen on adopting publicly transparent blockchain.  Some will want to utilize private blockchain in order to keep their sensitive data private.  That is to say, some companies will intentionally bypass VeChain for that reason and go on over to IBM or Hedera.

Disadvantages/Drawbacks

Despite its many advantages, VeChain does have a few drawbacks that are currently hampering or could hamper its ability to attract investors and/or enterprises to use its blockchain.

Firstly, there is a misconception that VeChain is a Chinese company or is a Chinese government cryptocurrency project.  This misconception comes from the fact that much of the business VeChain has been doing has been in the People's Republic of China.  Indeed, Walmart China alone has been responsible for the vast majority of transactions occurring on the blockchain.

This misconception has not only discouraged many potential investors but has also generated negative reviews (basically FUD) about the project.  This writer would like to set the record straight and say that in no way is VeChain a ‘Chinese crypto.'

Firstly, the VeChain Foundation is located in Singapore and has several offices throughout the world.  One office is located in Palo Alto, USA.  Secondly, while it is true that VeChain has partnered up with the Chinese government and many Chinese corporations, it also has partnered with European and even American companies.

For example, on December 1, 2020, VeChain partnered up with the US start-up KnowSeafood, so as to use its Toolchain-powered StoryBird application for transparency in its supply chain.  This partnership is essentially allowing VeChain to enter the $102 billion seafood industry.

Another potential disadvantage that may discourage investors from buying VET token has to do with the huge max supply of VET tokens.  According to CoinMarketCap, the current price of VET is $ 0.02683, there are currently 64,315,576,989 VET tokens in circulation.  Its max supply is 86,712,634,466.  Because of the huge number of VET tokens, this hampers the price of VeChain's smart money token from generating 20x – 100x gains.

For those who currently hold VET token, it has been reasonably assumed that the price of VET will inevitably hit $1.00.  However, others have predicted a price increase of up to $10.00 to even $100 per token.  Given that VeChain's current market cap is already $1.7 billion, a $10 or even $20 token price, although possible, is most unlikely.

Also, because of the huge amount of VET tokens in circulation, this means that for the price to go up at all, mass adoption is a must!  Should VeChain fail in this strategy, there is little chance for investors to gain any form of meaningful profit.

A third drawback with utilizing its ecosystem has to do with the little retail activity going on.  While giant corporations have found VeChain's Toolchain tool and blockchain to be appealing, there has been little retail, or everyday activity, on the blockchain, at least when compared to the amount of activity on the Ethereum platform.  While certain defi protocols and exchanges are powered by the VeChain blockchain, such as Vexchange, a fork from Uniswap, and OceanX, I'm afraid there isn't much else going on.

However, this could change.  Other decentralized ecosystems that are powered by the VeChain blockchain, such as Vimworld and VulcanVerse, appear to be very promising.  Both platforms have been hard at work in updating their ecosystems and NFTs for users.  And, activity on their platforms has been steadily increasing.  You can find out more about them by hopping over to their website.

A fourth potential drawback is that any investor in VET will have to hodl strong for quite some time before they see any big gains.  This means that unlike other crypto projects, investing inVeChain should be seen as a long-term investment, and by long-term, I mean approximately 2-5 years.  Some have invested in VeChain since as early as 2018.  Others earlier!  Others, however, have dumped their VET tokens for other crypto projects that promised them quicker gains.

While the project has been acquiring many partners during the last few years, getting them onboard into its ecosystem will take some time to develop.  For example, BMW Group has been a partner of VeChain since 2018.  Yet, the implementation of tracking its vehicles, spare parts, carbon, and mileage emission on the blockchain is still in their pilot program and will still require more time.  While this does not mean that investors will see some sort of profit in this current bull market, the gains over the long-term are expected to be even greater.

VeChain Review: Conclusion

In conclusion, based on all the information gathered, it is safe to say that VeChain has absolutely massive potential to succeed.  With the almost constant sign up of new partners and clients, as well as how much it has accomplished since 2018, and with the steady adoption of its blockchain, it is no wonder why anyone who takes a good look at the project will not be excited about it.  Even more so, virtually every well known YouTuber channel has spoken highly about the project, even those who do not have any VET in their portfolio.

However, as it was pointed out earlier, VeChain is not without its drawbacks.  The misconception about it being a Chinese controlled crypto project has discouraged many potential investors. Moreover, there is a lot of debate, if not outright suspicion, about VeChain's more centralized consensus algorithm, especially since the identities of many of the Authority Masternodes are not yet known.

One of the key reasons cryptocurrencies and blockchain have been very appealing has to do with decentralizing many sectors of every life, making them transparent, free of centralized control and manipulation.  Although VeChain does provide a legitimate reason for its algorithm, some may have second thoughts about getting involved in a project that hides its nodes.

It is also not very appealing to those who wish to make great gains quickly.  Unfortunately, VeChain is one of those projects that will take time to develop and be adopted.  Time is not of the essence for this project.

However, this writer believes that these disadvantages pale in comparison to the project's advantages and what it can offer.  As more and more retail and large corporations and enterprises continue to enter the crypto market, there can be no doubt that VeChain will be one of those projects that many will find very appealing to build their business on.

Vechain Review
Overall
3.6
  • Value for Money
  • Ease of Use
  • Quality
  • Features
  • Potential for Mass Adoption

Pros

  • Has acquired many well-known partnerships and big enterprises e.g. Walmart, BMV, PwG
  • Solid and professional leadership and team
  • Dedicated and friendly VeChain community
  • Well thought out roadmap and strategy
  • Constantly improving and upgrading their ecosystem. i.e. PoA 2.0, DaaS
  • Other organizations and industries are building on the blockchain for their own ecosystem i.e. Vimworld, VulcanVerse, Jur.
  • its blockchain is transparent, and its upgrades (DaaS) is open-source, allowing for massive adoption in other ecosystems.

Cons

  • Suited for long-term investment only.
  • Unless VeChainThor blockchain is massively adopted, low token scarcity may not generate high profits.
  • Very little dapps and retail usage have been occurring on the blockchain.
  • It is erroneously considered a Chinese company or a Chinese government-controlled token due to its many business partners from the People's Republic of China.
  • VeChain is not listed on some of the US' well-known exchanges, such as Coinbase.
  • Its governance modal and its PoA consensus algorithm are somewhat centralized.

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