What is VeChain (VET)?

September 12, 2024
8 min read

In recent years, blockchain technology has rapidly expanded beyond cryptocurrencies, finding applications in diverse industries. Among the notable projects leading this transformation is VeChain (VET), a blockchain platform designed to enhance supply chain transparency and business processes. Imagine a system where you can track the product journey from the consumer to the manufacturer with complete trust—this is the vision VeChain is turning into reality.

Originally launched to combat inefficiencies in supply chain logistics, VeChain has evolved into a multi-purpose blockchain platform that offers businesses enhanced transparency, traceability, and real-time insights. Through its unique blend of blockchain technology and IoT (Internet of Things) integration, VeChain ensures authenticity and prevents fraud at every step of a product’s lifecycle.

The importance of VeChain’s solution becomes evident in industries like luxury goods, pharmaceuticals, and food, where trust and verification are critical. As you explore VeChain’s functionality and potential, we’ll also highlight its native token, VET, and how this blockchain is transforming the way global industries operate.

What is The Definition of VeChain (VET)?

VeChain (VET) known as a blockchain platform that focuses on solving real-world business challenges, particularly in the regions of supply chain logistics and management. By leveraging distributed ledger technology (DLT), VeChain provides transparency, reduces inefficiencies, and enables businesses to gain more control over their supply chains.

At its core, VeChain allows businesses to create and manage decentralized applications (dApps) on its blockchain, which can be used to track, manage, and authenticate products across the supply chain. VeChain’s use cases extend across industries like luxury goods, agriculture, pharmaceuticals, and automotive.

How does VeChain (VET) work?

VeChain operates on a unique consensus mechanism known as Proof of Authority (PoA), which is distinct from more traditional Proof of Work (PoW) or Proof of Stake (PoS) systems. In PoA, selected validators, who are pre-approved by the network, are responsible for confirming transactions and maintaining the network. This system ensures both security and efficiency while reducing the computational power required compared to PoW.

Additionally, VeChain uses a dual-token system, which includes VET and VTHO. VET is the primary value-transfer token, while VTHO is used to pay transaction fees on the VeChain blockchain. This separation of functionality helps prevent transaction costs from fluctuating excessively with VET’s price.

Read More: What is VeChain (VET) Trading Bot?

What is VeChain token used for?

The VET token has several important functions within the VeChain ecosystem. First and foremost, it acts as a store of value that businesses can use to transfer value across the VeChain blockchain. It is also used for staking, where holders can lock up VET tokens in exchange for rewards in the form of VTHO, which is necessary to pay transaction fees. This staking mechanism allows businesses to utilize the network without facing unpredictable transaction costs.

VET is also crucial in governance. Token holders have the power to vote on key decisions about network upgrades and future developments, giving the community control over VeChain’s long-term direction.

What is the purpose of VeChain (VET)?

The primary purpose of VeChain is to solve inefficiencies within supply chains. Many traditional supply chain systems are plagued by issues such as a lack of transparency, counterfeiting, and inefficient processes. VeChain aims to address these problems by providing a platform where every stage of a product’s journey can be tracked, verified, and recorded on the blockchain.

Whether it’s ensuring the authenticity of luxury goods or verifying the storage conditions of pharmaceuticals, VeChain’s blockchain provides an immutable record that all parties involved in the supply chain can trust. This enhanced transparency helps businesses reduce costs, increase efficiency, and gain customers’ trust.

Who Are the Founders of VeChain (VET)?

VeChain was founded by Sunny Lu in 2015, a former CIO of Louis Vuitton China. Lu’s experience in the luxury goods sector gave him first hand insight into the challenges of supply chain management and counterfeiting, which inspired him to develop a blockchain solution. Jay Zhang, another key member of the founding team, focuses on the financial aspects of the project and has extensive experience in risk management.

Under their leadership, VeChain has grown into a prominent blockchain platform with strong partnerships, including collaborations with major companies such as PwC, BMW, and DNV.

What Makes VeChain (VET) Unique?

VeChain’s unique value lies in its real-world applicability and its dual-token system. Unlike many blockchain projects that primarily focus on financial applications, VeChain targets supply chain management—a critical yet often overlooked area.

Its integration with IoT devices also sets it apart. Through IoT sensors, data about a product’s journey—such as temperature, humidity, and location—can be recorded and verified on the blockchain. This level of detail is crucial for industries like food and pharmaceuticals, where improper handling can have serious consequences.

Moreover, VeChain’s partnership strategy with global enterprises adds credibility and trust, which many blockchain projects lack.

How Does VeChain Work?

VeChain operates through a combination of blockchain technology and IoT. Products are tagged with IoT devices, such as RFID tags or sensors, which continuously record data as the product moves via the supply chain. This data is stored on VeChain’s blockchain, offering an immutable and clear record that can be accessed by all stakeholders.

For example, a pharmaceutical company could track the temperature of a drug shipment from production to the pharmacy, ensuring it has been properly handled throughout its journey.

What problems does VeChain solve?

VeChain primarily addresses issues related to fraud, inefficiency, and lack of transparency in supply chains. Many businesses face challenges in verifying the authenticity of their products, tracking them efficiently, and ensuring that supply chain processes are transparent to all parties.

By using blockchain technology, VeChain ensures that each step in the supply chain is visible and verifiable. This decreases the risk of counterfeiting and fraud, particularly in industries like luxury goods and pharmaceuticals, where product integrity is crucial.

How Many VeChain (VET) Coins Are There In Circulation?

As of now, there are approximately 72 billion VET coins in circulation, with a maximum supply capped at 86.7 billion. This supply structure ensures that the platform has enough tokens to support its ecosystem while also preventing excessive inflation.

How Is the VeChain (VET) Network Secured?

VeChain employs the Proof of Authority (PoA) consensus algorithm to secure its network. PoA relies on a small group of trusted validators, who are selected based on their identity and authority within the network. This allows VeChain to achieve high levels of efficiency and scalability without sacrificing security.

Additionally, the platform is backed by VeChainThor, its native blockchain, which provides a robust framework for securing transactions, managing dApps, and ensuring data integrity.

Where Can You Buy VeChain (VET)?

VeChain (VET) is widely available on major cryptocurrency exchanges, including Binance, Huobi, and KuCoin. These platforms offer trading pairs for VET with other cryptocurrencies like Bitcoin (BTC), Ethereum (ETH), and stablecoins such as Tether (USDT).

For those looking to purchase VET with fiat currency, several exchanges also support direct fiat-to-crypto transactions.

Does VeChain burn coins?

VeChain does not have a traditional coin burn mechanism like some other cryptocurrencies. However, the VTHO token used to pay for transactions on the VeChain blockchain is burned after each transaction. This continuous burning of VTHO ensures that transaction costs remain predictable and that the system is sustainable over time.

How does Walmart use VeChain?

One of VeChain’s most notable partnerships is with Walmart China, which uses the platform to enhance food safety. By leveraging VeChain’s blockchain, Walmart tracks the supply chain of food products, ensuring they meet safety standards and providing customers with transparency regarding the origin and handling of the products.

VeChain Ecosystem

The VeChain ecosystem is designed to support an expansive range of applications, such as supply chain management, logistics, and sustainability initiatives. This ecosystem consists of various partnerships, dApps, and business solutions that work together to create a transparent and efficient network for businesses worldwide.

VeChain’s Sustainability dApp Platform – VeBetterDAO

VeBetterDAO is a decentralized application platform that focuses on sustainability within the VeChain ecosystem. It allows businesses and developers to create dApps that contribute to environmental and social goals, further enhancing VeChain’s commitment to sustainability.

Conclusion

VeChain (VET) stands out as a blockchain platform focused on solving real-world problems, particularly in supply chain management. Its unique blend of blockchain and IoT technologies enables businesses to enhance transparency, reduce fraud, and improve efficiency across global supply chains. VeChain’s strong partnerships, innovative technology, and commitment to sustainability further solidify its position as a leader in the blockchain space.

As more businesses seek transparency and traceability, VeChain’s platform continues to offer valuable solutions. If you’re looking to explore more about how blockchain can transform industries, or you’re interested in advanced trading bots, visit Argoox, a global leader in AI-powered solutions for financial and cryptocurrency markets.