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NZ Investors Guide To Vechain

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What Is vechain?

Vechain is a blockchain company founded in 2015.

Their key focus is on traceability.

What this means is information on manufacturers, raw materials, place of origin and so on can be stored and validated on the blockchain for each individual product.

This is intended to solve problems around counterfeiting and quality control.

An example: According to the Vechain whitepaper, four wine producers, Michele Chiarlo, Ricci Curbastro, Ruffino and Torrevento are using Vechain’s myStory system to provide traceability information on their wine bottles. Users can scan the tags and see all information related to the wine bottle, from ingredients to origin of supply.

Vechain’s technology is deployed via the VechainThor platform.

The platform is a two-token system that houses dApps, similar to NEO.

Vechain is partnered with several large global companies, working to create “blockchain as a service” solutions that they will pass onto clients and customers. Much of Vechain’s presence remains under the covers. Vechain’s claim is that in the future, “people will be using Vechain in their everyday lives and not even know it.”

Notable partners include DNV GL, Price Waterhouse Coopers and the Chinese government.

The vechain Team

Vechain’s team is based in Singapore. Here are some of the key players:

Sunny Lu

Sunny is the founder and CEO of Vechain. His is an engineering graduate from Shanghai Jiao Tong University. He formerly held management positions at 3M and Bacardi, and is the former CIO and CTO of Louis Vuitton China.

Jie Zhang

Jie Zhang serves as the Vechain CFO. He is an engineering grad from Shanghai Jiao Tong University, and is a former manager from Deloitte UK and PWC China. He joined Vechain in 2015.

Kevin Feng

Kevin Feng has a decade-long career with PwC in various countries, working in cyber security and more importantly, blockchain tech development. He serves as Vechain’s COO.

Jianliang Gu

Jianliang Gu is the CTO of Vechain. He previously served as director of R&D for Alcatel for 13 years.

Vechain has a very large and varied team, all with links to Twitters and Linkedin profiles on their website. Check it out here.

The Product

The VechainThor platform is being developed in four stacks:

Touching Points: NFC and RFID chips are used to digitize products and capture environmental, inertial, gas and location information. This is VeChainThor’s connection to the physical world. Connection: The connection stack transmits the data captured through the sensor stack. These two stacks form the IoT technology portfolio of VechainThor.Blockchain Core: The blockchain processes transactions, smart contracts and stores data.Applications and Services: These are common protocols built into the blockchain to standardize app development, such as VeVID for KYC, VeVOT for voting, VeSCC for smart contract certification, VeSCL for the Smart Contract Library and other suites for things like side-chains, cross-chains, data feeds, oracles and so on. This maintains a set of standards that simplify dApp development for third parties.

Two token model

Vechain claimed in their whitepaper that one of the biggest obstacles to business adoption in blockchain is uncertainty about cost.

As a platform becomes more popular, demand for the token goes up, which increases the price. It is simply too hard for businesses to forecast costs when prices are so unstable.

To combat this problem, Vechain developed a two-coin model: The Vechain token (VET) would be used for holding a stake in the platform, and VeThor tokens (VTHO) would be used to actually pay for usage. VTHO is generated passively to holders of VET.

Through this model Vechain hopes transaction fees won’t be exposed to the volatility of the crypto market, making it more suitable for business operations.

The exact mathematics of the model can be found in the whitepaper.

Payment model

To further make the platform everyday business-friendly, Vechain has a payment model that allows the receiver or sponsor to pay the transaction fees on the platform.

This gives businesses the ability to interact with other entities or customers who have no desire to deal with crypto-related assets. A business can pay for the transaction fees of all users itself, without the users needing to deal with private and public key pairs. This removes one of the main obstacles of bringing ordinary people into dApp usage. 

Proof of Authority Consensus 

Proof of Authority (PoA) is a consensus model designed by Vechain, which is a more centralized and transparent form of proof of stake.

In the PoA model, there are 101 known validators known as Authority Masternodes.

To be an Authority Masternode, the individual or entity must make their identity public and go through KYC. It is their identities and reputations placed at stake that give all the Masternodes incentives to act with integrity and keep the network secure.

PoA in some ways is more secure than PoW or PoS, because it requires actual collusion by 51% of the nodes. This is in contrast to Bitcoin, which simply requires a large investment of computing power by a single entity acting alone.

Authority Masternodes are required to hold 25 million VET, and are selected based on certain conditions by the Vechain Foundation.

Governance

Vechain believes that decentralization is too idealist, and that even in BTC and ETH, those ideals have still veered back towards centralisation, with few wallets holding large amounts of the supply.

Vechain’s approach is to find a middleground between centralisation and decentralisation.

Vechain’s development and direction is governed by a group they call the “Board of Steering”, which consists of between 7-13 members at any one time.

The members of the board are voted on by what Vechain calls “stakeholders”.

The stakeholders can be individuals, corporations, government agencies, non-profit entities or other legal institutions. Stakeholders exercise governance through voting. The larger amount of VET a stakeholder has, the more voting power.

Votes are cast anonymously through a native Vechain servce called VeVote.

The Foundation also acts as the selector of Authority Masternodes. 

While the Authority Masternode system doesn’t act as a purely decentralised consensus, it does decentralise it enough that no one party has power of the network.

Traceability through the supply chain

Vechain Thor’s primary use case is traceability. 

Their overall goal is to trace the full life-cycle of products, from the manufacturing, logistics and supply chain, retail and wholesale, and even consumer after-service and engagement. Every managed product is allocated with a unique VID presented by an IoT tag and registered on the blockchain. This allows all parties, whether producer or consumer, to access and recognize the same object in every step of its life-cycle. Not only does this provide tamper-proof information, it also reduces the overall cost involved in manufacturing/delivering the product. 

The process looks like this:

  1. The manufacturer, most of time the third party supplier, establishes the physical connection between product and tag with production information records such as location, time, raw material, craft, quality check, and so on. 
  2. The brand owner can control the smart contract for VID registration to “activate” the product officially after the quality check and acceptance to eliminate the possibility of overproduction. 
  3. Data from logistics and supply chain operations can be recorded on blockchain through APIs from WMS and supply chain systems.
  4. Retail systems can perform ownership transfer by calling a smart contract during the selling process to end users just like sending an email. 
  5. Consumers can claim digital ownership and engrave a personal signature to create their own story. 
  6. After service, CRM and digital experiences all can be improved and shaped by building up a unique and customized bridge to consumers with privacy protection and consumer consent. 

VIDs are generated using a SHA256 Hash algorithm (I talk about SHA256 hashing in my guide, How Bitcoin Works).

VIDs can then be written into the IoT (Internet of Things) tags and Vechain NFC and RFID chips, or even QR codes. This links the unique blockchain ID with the physical product, that allows the traceability process outlined above.

Once stored in the blockchain, all data connected to the product is immutable.

Token (metrics and utility)

Metrics:

During the ICO 1 billion VET was issued. 132,837,366.56 was burned and disclosed.

After VET did a 1:100 split, the total supply became 86,712,634,466 (~86.7 billion VET). This is the hard cap.

The allocation is as follows:

  • 41% ICO investors
  • 9% private sale investors (such as VC funds).
  • 23% enterprise investors (enterprises active in the ecosystem).
  • 5% development team and founders.
  • 12% operating costs.
  • 10% business development and support.

Vechain promises to share quarterly financial reports.

Utility:

VET is the native token and provides access to the platform.

VET tokens generate VTHO, which is deposited into the wallet of the holder.

VTHO is like the energy of the Vechain platform, and is required to actually pay for activity and transactions.

The Community

The Vechain investor community is extremely active and vocal on social media and reddit. New partnerships are reported religiously. It’s a coin that gets a lot of hype, but generally has a lot of worthy developments to back it up.

The nodes initiative also brought many investors heavily into the space. 

Vechain Foundation

The Vechain Foundation is a non profit whose purpose is to develop the Vechain ecosystem and expand the community.

According to the Vechain whitepaper, the foundation’s funding is from the following:

  1. ICO funds: 41% of tokens were sold in the crowdsale. Proceeds are under management of the foundation.
  2. Digital asset fund: About 5% to 10% of the funds go to a VeChain Incubation Program with other VC funds (I’m not sure how this provides income to the foundation though?)
  3. Professional Services: The foundation can help develop solutions for use on Vechain for enterprises, receiving income in VET.

The Vechain Foundation makes regular updates to the community on its blog.

Partnerships

Vechain has, hands down, the most impressive list of partnerships in the industry. Here are just a few:

  1. DNV GL: One of the largest assurance and audit companies in the world. DNV GL is a Vechain Authority Masternode holder and is involved in several of its product developments. 
  2. Price Waterhouse Coopers: The world’s largest audit and accountancy firm. PwC aims to incorporate Vechain into solutions for clients.
  3. China National Tobacco Corporation: Vechain partnered with NRCC and DNV GL to build anti-counterfeiting solutions for China National Tobacco.
  4. Yida Group: Yida is one of the biggest real estate developers in China. Vechain has been partnered to integrate blockchain into the current Yida portfolio, mostly surrounding energy.
  5. Gui’an government: The Chinese government has contracted Vechain to provide a blockchain based information system for the new city of Gui’an.
  6. D.I.G: Direct Imported Goods imports over 30% of China’s wine. 30,000 counterfeit wine bottles are sold in China every hour. Vechain has been contracted to provide anti-counterfeiting solutions using NFC chips.
  7. BMW: Vechain is participating in BMW’s startup garage. They will be testing a prototype for using blockchain tech as a way of storing vehicle data.
  8. Kuehne and Nagel: K&N is the world’s largest freight company. Vechain is working with them to build a supply chain management system.

There are also reported partnerships with Louis Vuitton, China Unicom and Renault, however I haven’t been able to find any official correspondence on those.

For a full list of Vechain partnership updates, click here.

B Money Verdict:

Overall I’m excited about Vechain.

However, I also feel like it’s hugely ambitious, and I’m not convinced they have the team to pull it off. The kind of platform they are visualising is going to change the world. You need a few rockstars and a lot of funding to bring that to life.

However the results speak for themselves. The partnership they have with DNV GL is fruitful and impressive. They couldn’t have asked for a more perfect partner, both for clout and connections.

I like Vechain’s transparency. While some projects, such as OmiseGo, don’t even list their teams on their website, Vechain has their full time, with bios, Twitters and Linkedin profiles, all displayed for easy access. Full provision of basic information like this is rare in crypto, so it gives you confidence as an investor to see it. The Foundation blog is updated regularly.

On the other hand, Vechain’s partnership announcements are sometimes fluffy. There are several partnerships they have claimed, but I cannot find formal announcements for. Of course companies like Microsoft or BMW don’t give press releases for every single new business dealing they make, but I feel like the Vechain Foundation could be more forthcoming with some of the claims they make.

Another plus is Vechain’s branding. While I’m not convinced that VechainThor is the most marketable name, their website, wallet and branding materials are all very nice. The company itself is still called Vechain.

As for the tech, I like the PoA protocol. I think for a platform like Vechain, which aims to connect various enterprises and is rather complicated, PoS wouldn’t be suitable. Enterprises need assurance and stability, and PoA, especially with the KYC requirements, provides that. I think in many cases, that could give it an edge over NEO for some users.

With such an ambitious project, the risk is high, and I’d like to see a stronger team. However, Sunny Lu obviously has all the right connections and is signing partnerships with all the right people. Overall I’m calling this one as medium risk, high reward, with plenty of upside.

The Good Stuff

  • Unrivalled partnerships
  • PoA consensus makes a lot of sense
  • Two token system is clever
  • Good branding
  • Excellent use case

The Bad Stuff

  • Team could be stronger
  • Still not ready for real world use

Scorecard:

Category

Score

Notes

TEAM​

7/10

The team isn’t bad, but lacks X factor. 

PRODUCT

7.5/10

The concept is amazing, but still much to be developed. Score will increase as real world usage emerges.

TOKEN

9/10

Utility is good – passive VTHO generation and nodes. Demand for VET will increase with usage. Metrics acceptable.

COMMUNITY

9/10

Partners like China government, PWC and DNV GL are hugely valuable. Investor community strong. Foundation releases updates regularly, could be more forthcoming with info.

32.5/40​

How To Buy vechain In New Zealand

To buy Vechain instantly with New Zealand dollars, I recommend using EasyCrypto. Rates are some of the fairest in NZ and transactions are fast. You can sign up for a free EasyCrypto account here.

Alternatively, advanced investors can try international exchange Binance.

Useful Links

WHITEPAPER: https://cdn.vechain.com/vechainthor_development_plan_and_whitepaper_en_v1.0.pdfWEBSITE: https://www.vechain.comBLOG:https://medium.com/@vechainofficialREDDIT:https://www.reddit.com/r/Vechain/TWITTER:https://twitter.com/vechainofficialBUY WITH NZD: EasyCrypto 

REFERENCES

  1. Vechain guide by Investinblockchain: https://www.investinblockchain.com/what-is-vechain/
  2. Vechain Thor launch covered by Coindesk: https://www.coindesk.com/vechain-arrives-know-1-5-billion-blockchain-business
  3. Complete list of Vechain partnerships: https://vechaininsider.com/partnerships/a-complete-list-of-vechain-partnerships/