What is VeChain?

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What is VeChain?

So, What Exactly is VeChain?

VeChain is a platform created using Blockchain technology and designed to improve existing supply chain management and oversight. The platform takes advantage of several elements of Distributed Ledger Technology (DLT) to facilitate the process of origin confirmation and a quality mark of a particular product. VeChain is made up of two tokens:

  • VeChain Token (VET)
  • VeChain Energy (VTHO)

VET is the cryptocurrency used in the VeChain network, whereas VTHO is the energy used to power transactions.

Who Invented VeChain?

VeChain was set up in 2015 by the former Chinese CIO of the high-end fashion brand, Louis Vuitton. Sunny Lu, started the platform under the umbrella of the Bitse group and began attracting several major clients, including fashion brands and other businesses. At the time, VeChain operated within the Ethereum Blockchain and functioned with the VEN token. By 2018, however, it rebranded and set up its own Blockchain.

As is customary, Sunny Lu published the main goals for the platform in the white paper. His primary ambition was to revolutionise the supply chain industry which has changed very little for hundreds of years. In addition to this primary goal, VeChain will eventually morph into an Internet of Things (IoT) platform and support dApps and Initial Coin Offerings (ICOs).

One of the platform’s key channels for success is strategic partnerships. The global accounting firm, PriceWaterhouseCoopers (PwC) was amongst the first entities to partner with the platform and also allowed it to incubate within its offices. Another notable partnership is with Jiangsu Electronics, a Chinese firm that developed the necessary RFID chips used on the products tracked by the platform. 

Why Was it Created?

The supply chain industry has become very efficient and, in most parts, automated. However, it is generally unable to provide an indisputable guarantee that a particular product is authentic or counterfeit. It is estimated that fake goods cost the luxury industry over $30 billion in 2017. VeChain’s technology can help disrupt the status quo and provide transparency and source of origin information to clients and businesses alike.

This goal is best described in the token’s white paper, which states “to build a trust-free and distributed business ecosystem platform to enable transparent information flow, efficient collaboration, and high-speed value transfers”. Using Blockchain technology, VET can democratise manufacturing data, giving all stakeholders access to the same verified information.

How is VeChain Different from Traditional Currencies?

There are several factors that distinguish VeChain from traditional currencies such as EUR and USD. The token is immutable and protected by the Blockchain within which it exists. Furthermore, VET is also:

  • Decentralised
  • Anonymous
  • Highly divisible
  • Portable

The following sections will explain these features in further detail.

Decentralization

As a cryptocurrency operating on a Blockchain, VET is, for the most part, a decentralised currency. This means that there is no single entity, such as a central bank, which can influence its value or suddenly remove its supply. However, unlike fully decentralised cryptocurrencies, such as Bitcoin, VeChain transactions are approved by validators. This limits the number of individuals who can determine whether to verify or cancel a transaction.

Anonymity

In the same way that cash is anonymous, VET does not reveal who the parties of a transaction are. However, unlike cash, since VET transactions are shown on a DLT, it is possible to see the history of transactions. As a result, the cryptocurrency is able to provide anonymity whilst also providing traceability and transparency.

High Divisibility

When dealing with traditional FIAT currencies you are normally limited to dividing an entire coin into 100 parts. VET, along with most other cryptocurrencies, can be divisible by a significantly higher amount. This presents several advantages, especially since the total supply is capped at 86,712,634,466 coins. It is, therefore, possible to maximise the use of these coins by splitting them over and over again.

Portability

VeChain is a digital currency which only exists on the Blockchain. This means that carrying it around is not necessary, or possible, and you simply need a wallet that can give you access to your coins. There are several hot and cold storage devices that support the coin and let you send and receive VET wherever you are.

VeChain and Blockchain

Although VeChain might operate in a different way to Litecoin or Bitcoin, it still exists on a Blockchain and must, therefore, follow similar rules. In order to approve the creation of new blocks, multiple users are required to ensure that the block is genuine and correct. For most cryptocurrencies, this process, or consensus protocol, is called Proof of Work (PoW).

However, PoW has its limitations and criticism, including the fact that only the first computer to crack the puzzle earns any rewards. For this and other reasons, VeChain adopted an alternative protocol known as Proof of Authority (PoA).

With PoA there is no code-cracking. Instead, computers from an approved group are used to validate new blocks. This simpler process makes transactions faster, not only when compared to PoW alternatives, but also when compared to Ethereum‘s Proof of Stake (PoS) improvement. 

Notwithstanding the benefits of PoA, some critics argue that the process decreases the cryptocurrency’s independence and decentralisation. Whilst this might be true, it is arguable necessary to allow faster transactions whilst maintaining a balance between decentralisation and centralisation.

VeChain is one of the thousands of different cryptocurrencies in existence. Just like other notable coins, including Bitcoin, it has its own white paper and specific purpose. VET can be traded online and can be bought via several means. VeChain is 100% legal and can be used across the world. The main exception relates to countries or jurisdictions where cryptocurrencies are illegal. Apart from ensuring that using digital tokens is legal in your country, you should always ensure that it is also legal in any country you visit so as to avoid any complications.

Where Can You Buy VeChain?

There are several different ways to buy VeChain. The coin currently ranks as the 24th most popular cryptocurrency and has an average trading price of $0.017. Even though it is not as popular as major coins, over $145 million in VET is traded on average each day. This makes the coin attractive to users as well as to speculators, looking to benefit from the constant price fluctuations.

Buying VeChain Online

You can get hold of VeChain conveniently online using a debit or credit card. Two of the largest cryptocurrency exchanges, namely Binance and Coinbase, support the trading of VET and VTHO. Opening an account with either of these platforms is fast and simple, and both provide you with an in-built wallet to store your cryptocurrency.

In addition to using traditional currencies, Binance lets you buy VeChain using one of over 450 different coins and tokens. Coinbase, on the other, provides several payment options apart from cards, including bank transfers and, in the case of withdrawals, PayPal.

Changelly offers an alternative and more anonymous option to buy VeChain online. The global trading platform only requires basic information and does not collect any user documentation. You can use several payment options, including cards, but the platform does not provide an in-built wallet.

5/5

As with any asset, the value of Digital Currencies can go up or down and there can be a substantial risk that you lose money buying, selling, holding, or investing in digital currencies.

Buying VeChain with Cash

Since VeChain is not amongst the more popular cryptocurrencies, there is a limited possibility of buying the token with cash. Whereas Bitcoin and Litecoin have their own ATMs which allow you to use cash, your only option for VeChain is to find a seller willing to accept cash. You would generally need to visit a peer to peer site or cryptocurrency forum and search for a suitable seller in your geographical area.

When buying VET with the cash you need to be careful about possible scams. Apart from taking common-sense security precautions, you should ensure that you receive your coins as you hand out the cash. 

What Can You Buy With VeChain?

As an individual, you are unlikely to have any use for VeChain other than a speculative asset. The cryptocurrency and platform are commonly used by larger businesses to help them manage their supply chain better. Over time, the coin has been used to track the manufacturing of several higher-end products, including vehicles and wine. Furthermore, due to its strong relationship with the Chinese government, VeChain is being used to store bank account details and business certificates for an entire region.

If you are looking to buy cryptocurrency in order to use it to purchase goods or services, you’d probably be better off choosing Bitcoin or Litecoin. These coins have been specifically created with the purpose of commerce, and are already accepted by hundreds of different online retailers, travel agents, and casinos. Paying using these and other cryptocurrencies is fast and easy, and normally provides you with additional benefits than using traditional currencies.

Selling Your VeChain

Just like buying VeChain, there are several options to sell or trade your cryptocurrency. Binance, Coinbase, and Changelly all provide you with this option, although you should always calculate the final sale price before choosing. Sometimes, even though you might get a marginally better sale price from one exchange, transaction fees or other charges might eliminate any additional profit.

Even though VET does not rank amongst the top 10 largest cryptocurrencies it still carries a market cap of close to $1 billion. This fact, coupled with its average daily trading volume makes it an attractive cryptocurrency to speculate on. 

Is VeChain Available Worldwide?

As a decentralised cryptocurrency, VeChain is available worldwide and can be accessed and used from pretty much anywhere. Although some countries restrict or outright ban the use of cryptocurrencies, there is no way for them to block their use. This reality is due to the way digital tokens are created and exist within a DLT. No single or central entity has the authority or undue influence on the Blockchain, and therefore, there is no entity to coerce into not being available worldwide.

How Safe Is VeChain?

As a Blockchain, VeChain has remained relatively below the radar of hackers since it is not as popular as Bitcoin or Ethereum. Notwithstanding, the company behind the platform has fallen victim to a successful hack worth around $6.53 million. Since then it has taken measures to beef up security and improve internal protocols.

The VeChain ecosystem includes several key parts, including the exchanges where the coin is traded and wallets where it is stored. At each part, security is vital, and any weakness in one area could affect the others. To a certain point, it is up to the individual user to ensure that the necessary safety measures are implemented, used, and updated.

How to Store Your VeChain 

Before you purchase your VeChain tokens you need to consider where to store them. Cryptocurrencies can normally be stored in either cold or hot wallets. Choosing between the two types depends on your short or long-term plans.

Cold Wallets

Cold wallets, also referred to as hardware wallets, are considered to be the safest type of cryptocurrency storage. These physical devices are only connected to the Internet during transactions and are therefore almost impossible to hack remotely. There are several devices to choose from, and although the best ones are not free, they support a large number of coins and features several security tools.

Hot Wallets

Hot, or software wallets are considered to be less safe than hardware wallets simply because they tend to be continually connected to the Internet. As a result, a successful phishing attack could easily result in the loss of your funds. Fortunately, certain tools, such as two-factor authentication (2FA), reduces the risk of such events. Hot wallets can either be desktop, mobile or web wallets and can be free or come at a cost.

Further Ways to Protect Your VeChain 

As with any cryptocurrency or digital currency, the protection of your funds depends on your ability to secure sensitive credentials. In the case of VeChain, your primary method of accessibility is your private keys, which you should never share with any third parties. If you have a significant amount of VeChain, you should consider splitting funds into two or more wallets. According to industry experts, you should only store small amounts of coins in a hot wallet, and store the majority of funds in a cold storage device.

Major Advantages of VeChain 

The use of Vechain by businesses and corporations looking to prove the authenticity of their products is certainly the cryptocurrency’s biggest advantage. For individual users, the coin offers an alternative to traditional currencies which is faster and cheaper to transfer and provides a greater degree of anonymity. As a cryptocurrency, VET is immutable and decentralised, deriving its value from the open market.

Using VeChain over other cryptocurrencies, such as Bitcoin and Litecoin, also has certain advantages. Since VET uses PoA to add new blocks, transactions are faster and normally cheaper. This makes its use for commerce more appealing.

Some Disadvantages

Since VeChain is not well-known and sparsely supported, it can be difficult to find online stores or exchanges which accept it as payment. It is usually simpler to just sell the coin or trade it for another cryptocurrency if you wish to make a purchase from a particular website. Furthermore, the currency has a volatile price history which might make you think twice about storing the coin long term.

Concluding Thoughts

VeChain represents one of many ways in which Blockchain technology will disrupt traditional industries in a positive way. The trust brought about by the platform has already improved the supply chains of corporations around the globe, and future plans promise to help introduce IoT into mainstream use. VET’s growth has been steady but has yet to experience the same explosion seen by several coins, including Bitcoin. Nevertheless, it can boast a feature that very few other coins can; it is already being successfully used in a commercial environment that goes beyond speculative trading.

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