What is VeChain? VET explained
It's linked to the internet of things and it’s used by big companies, but what is VeChain?
The VeChain – or VET – cryptocurrency is a coin that has some interesting uses and a history that makes it a little different from other cryptos. But what is VeChain? And what is VeChain used for? Here, we’ll take a look at the history and uses behind it.
Before we talk about the VeChain cryptocurrency, however, we need to explain what the VeChainThor blockchain is – after all, a sensible VeChain review would look at the system behind the coin, so that is what we are going to do.
VeChainThor and DApps
The VeChain blockchain is a network that is designed to allow people and companies to make use of decentralised apps (DApps) to deliver better services and gain an understanding of their own products.
Now, let us first explain what DApps are.
Decentralised finance (DeFi) is the idea that, ultimately, drives blockchains and cryptocurrency as a whole. The World Bank says there are 1.7 billion people who do not have a bank account. However, as roughly 66% of them do own a mobile phone, advocates of DeFi are hoping to reach these people in order to (hopefully) promote financial inclusion. The aim is for a fairer version of traditional financial services, accessible online.
DeFi has the goal of providing a modern, fairer alternative to all of these services that can be accessed over the internet. These tools are often available in the form of decentralised apps – or DApps for short. These DApps are a crucial part of what the blockchain does. The blockchain is intended to help people deal with certain issues and transactions, and enable them to set up DApps to be able to do that.
One of the problems companies and individuals frequently face is the way supply-chain data is transferred. Often, different bits of data are separated from each other, which means – at least in theory – that the transfer of information can be slow.
VeChainThor aims to avoid this problem by using the blockchain to stop “this asymmetric information problem and allow ownership of data to return to and empower its owner”, as it describes it on its white paper.
The VeChainThor blockchain does this by allowing the information as a whole by to be viewed by authorised people, therefore allowing them to make decisions based on a greater transparency for how the system or product works. The blockchain’s white paper explains it thus: “VeChainThor is a public blockchain that is designed for mass adoption of blockchain technology by business users of all sizes. It is intended to serve as the foundation for a sustainable and scalable business blockchain ecosystem.”
VeChainThor wants to give any user the chance to create their very own DApp that works in a way that the company making the DApp wants it to work. It does this by allowing people to use its DApp-creation tool – the VeChain ToolChain.
So far, a number of high-profile businesses use DApps on VeChainThor. These include German car manufacturer BMW, which uses a DApp to help combat odometer fraud; American supermarket giant Walmart, which uses a DApp to track where their food comes from; and luxury goods company LVMH, which uses a DApp to track its luxury leather products.
How it works
Like most blockchains, VeChainThor uses a consensus mechanism in order to track which transactions are accepted and added to the blockchain. In this case, the consensus that is used is called Proof-of-Authority (PoA). This works in a different way to the more common Proof-of-Work and Proof-of-Stake (PoS) mechanisms.
In order to work, PoA requires the following things:
- Formal identification of on-chain users.
- Eligibility based on certain criteria, such as a good reputation or being linked to a particular organisation.
- Total conformity to the procedures and rules of the blockchain.
This process means that it does not use potentially ecologically unsound computing powers as in PoW, nor is it theoretically open to anyone who trades in the network’s associated coins and tokens, as with PoS. The way PoA works means that, in both theory and in practice, it is attractive to big companies who want to make use of blockchain technology to make their products and services better.
Another point to make about the VeChainThor blockchain is that it isn’t purely all about computing data. As we have already seen, some large businesses use DApps on the network to track how their products are doing. This is because the network allows those users to make use of chips and radio information-transmitters to send information straight to the blockchain – for instance, this is how BMW will be able to use the network to combat odometer fraud. If the legitimate mileage is sent and is available on VeChainThor, then that can easily be checked against what the car’s actual odometer is saying. In this case, we can see that a car is, in effect, part of the online blockchain.
There will be other instances of non-computing objects being de facto internet devices with online connectivity. The idea that things that aren’t computing devices can be connected to the internet is called the Internet of Things (IoT) – a growing trend that is also crucial for VeChainThor.
One other thing to note about VeChain is the background of its co-founders. Rather than purely working in the technology sphere like many other blockchain founders, Sunny Lu was formerly the chief information officer for Louis Vuitton (LV) China, while Jay Zhang worked as a senior finance and risk manager for accountancy firms Deloitte UK and PriceWaterhouseCoopers China before they joined forces to set up the blockchain in 2016.
Anyway, that’s the VeChainThor blockchain explained. But what is VeChain (VET) itself? Let’s have a look.
The veChain cryptocurrency is one of two native cryptos on VeChainThor. The other one is VeChainThor Energy (VTHO) , but it is the VET cryptocurrency that is the best known of the two. As of 16 November 2021, there were 64.32 billion VET in circulation out of a total supply of 86,712,634,466, so there are quite a few VET coins about. Meanwhile, there are presently 42 billion VTHO coins in circulation, although there is an infinite number of coins that could be produced.
Basically, VET is used to store and transfer value in terms of smart contracts – computer programs that automatically execute once certain conditions are met – while VTHO is used to pay for transactions.
VET is tradeable and it also gives its holders certain privileges – for instance, holders can vote on changes in the protocol behind the blockchain. This is common with many blockchains and coins, but one slight difference is that users who have completed ‘Know Your Customer’ checks and have more than one million VET coins will have a greater voting power than those who do not.
VTHO is used purely to fund transactions on the network, and its supply can be changed to ensure a constant steady value.
So that’s VeChain explained for you. However, please remember that if you do want to invest in the coin, you will need to do your own research – never invest more money than you can afford to lose.
As of 16 November 2021, there were 64.32 billion VET in circulation out of a total supply of 86,712,634,466.
There are 42 billion VTHO coins in circulation currrently, however the total supply is infinite.
One of the most notable things about VeChain is how it links in with the so-called Internet of Things. Another important feature is its use of the Proof-of-Authority consensus mechanism, which promotes openness, transparency and accountability.
You can buy veChain (VET) at some crypto exchanges, though not all have it. While it is not yet available at currency.com, we will let you know if and when it is.