A supply chain solution is something that tracks the movements of products around the world- from their design and manufacturing to delivery.
Why do we need supply chains?
If you’re a weapons manufacturing company specializing in guns and explosives, you need to diligently track every detail of your product to ensure it doesn’t end up in the wrong hands. If an item goes missing, it’s important to know how that happened so precautions can be put in place. What if the gun was stolen by a crazy delivery driver?
Another example is a luxury watch company like Rolex tracking the authenticity of its products. If someone on the street is selling “Rolex watches” for half their retail price and claiming them to be real, how does Rolex step in to fix this problem? Through supply chains, of course.
So where does VeChain fit into this? Well, VeChain is a supply chain solution on a blockchain. In fact, their technology is already being used by the likes of BMW and Walmart. Walmart tracks its food supply to assure quality, and BMW tracks its cars to avoid odometer fraud.
Welcome to VeChain
VeChain is an enterprise-level blockchain solution that helps companies track their products from the manufacturer to the consumer. This ensures quality and helps companies pinpoint any issues or discrepancies. It’s not a product made for me and you, so it might seem quite strange. However, for many big businesses, VeChain is an incredible advancement that is already having a substantial impact.
Why do we need VeChain? The supply chain solution market has been active for a very long time. That’s why we have barcodes and serial numbers.
Well, VeChain still uses these transitional tracking methods, but it has innovated in two ways.
- Internet of Things (IOT): throughout the chain, the products are connected to the internet, to make sure there is an online trace.
- Then, the trace is sent to the VeChain blockchain, where it is stored forever for anyone to see.
Two of the biggest beneficiaries are food companies auditing the quality of their food and luxury brand companies assuring the authenticity of their products.
The big advantage over traditional supply chain solutions that VeChain possesses is the fact it’s blockchain. The data cannot be changed or manipulated. It’s the same advantage crypto has over most normal ledgers. It’s written in stone, not in sand.
The VeChain ecosystem
VeChain itself is the blockchain. Now, it used to be a token on the Ethereum blockchain when it was launched in 2015. However, to develop the project further it was transitioned to its own blockchain.
The Tokenomics of VeChain and VeThor
VeChain actually has two tokens. VeChain (VET) and VeThor (VTHO). Having two tokens allows it to avoid congestion of the network and fluctuations in fees.
VET is used for transactions, while VTHO is used for fees. So if you’re sending someone VET, you’ll need to pay a little VTHO.
There are currently around 66 million VET tokens in circulation, with a max supply of 86 million. What’s really cool about VET is holders automatically earn VTHO like a passive income.
VTHO is generated based on VET holdings, so the circulating and max supply is relative to VET. Although VTHO is earned passively by holding VET, 70% of the VTHO used in to pay for a transaction is burned.
Proof of authority
VeChain (VET) is a Proof of Authority (PoA) token, which makes it very energy efficient. A recent CTI report showed that VeChain’s annual carbon footprint is incredibly small at just 2.4% of the emissions of mining a single Bitcoin. But what is it, and how does it work?
Proof of Authority (PoA) is a reputation-based consensus algorithm that provides an efficient solution for blockchain networks. The term was proposed in 2017 by Ethereum co-founder Gavin Wood.
The PoA consensus algorithm leverages the value of identities, which means that block validators are putting their reputation on the line. This means PoA blockchains are secured by the validating nodes that are seen as trustworthy.
Proof of Authority doesn’t need many validators, which is why it’s such a scalable system. Blocks and transactions are verified by pre-approved participants. PoA is considered to be one of the most effective and reasonable solutions for blockchain security.
As an additional note, to be a node on the VeChain blockchain, authorities still need to stake a minimum of 25 Million VET Tokens. This makes sure the people securing the network have a real incentive to do it properly.
