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What is VeChain and how it works

What is VeChain and how it works

VeChain is a public blockchain platform designed to simplify supply chain management. Its native token, VET, is in the top 50 most popular cryptocurrencies list.

Blockchain technology has been hailed as a game-changer for businesses, with its decentralized and transparent traits offering numerous benefits.

However, the high costs of building and maintaining blockchain-powered applications have prevented many enterprises from fully tapping into their potential.

With the rise of distributed ledgers, many projects have tried to lower entry barriers. One such platform is VeChain, developed to increase the widespread adoption of blockchain technology.

In this article, we’ll look closely at VeChain, including what it is and how it works. We’ll also delve into the features that make VeChain stand out from other blockchain platforms, how to buy VeChain, and how VeChain staking works.

What is VeChain (VET)

VeChain is the brainchild of Sunny Lu, a former CIO of Louis Vuitton China. He expertly combined his knowledge of luxury goods with blockchain technology to create an internet of things (IoT) application for the supply chain management.

VeChain is a blockchain platform designed to simplify supply chain management. Initially created to combat fraud and knock-offs, big-name corporations have since used the platform to track everything from wine production to car manufacturing. 

Its process is simple: give each product a unique identity, and use sensors to track every stage of the supply chain. This ensures that products are handled correctly, giving companies and consumers peace of mind that their purchases are authentic.

Behind VeChain is the VeChainThor blockchain, which supports the VeChain token (VET) and the VeThor token (VTHO). VET transfers value across the network, while VTHO powers smart contract transactions.

As of March 2023, VeChain boasts a market cap of $1.6 billion, ranking as the 36th largest cryptocurrency. Meanwhile, VTHO has a market cap of $83 million, placing it at the 298th spot among digital currencies. 

https://coinmarketcap.com/currencies/vechain/
VET price chart | Source: CoinMarketCap

What defines VeChain

Here are some VeChain’s distinctive features:

  1. Dual token system: VeChain has a dual token system consisting of VET and VTHO. VET is the primary token used for transactions on the network, while VTHO is used to pay for the computational power required to execute smart contracts.
  1. Proof-of-authority consensus algorithm: VeChain uses a unique consensus algorithm known as proof-of-authority (PoA), which is different from the more common proof-of-work (PoW) or proof-of-stake (PoS) algorithms. PoA is faster, more energy-efficient, and more secure than consensus algorithms.
  1. Thor power: VeChainThor generates a second token called Thor Power (Tfuel), which can be used to pay transaction fees on the network. This makes the VeChain net more accessible and affordable for small businesses.

VeChain use cases

VeChain enables businesses to enhance transparency, traceability, and data sharing by offering a range of use cases, ensuring trust and transparency in business transactions. Here are some examples of how VeChain is used in various industries:

Luxury goods

VeChain has partnered with Givenchy to create a blockchain-based authentication system that allows customers to verify the authenticity of their products through a digital certificate. This system ensures greater transparency and trust in the luxury goods market.

Automotive industry

In collaboration with BMW, VeChain has developed a blockchain-based system that enables secure tracking and sharing of vehicle data. This system enables BMW to share data with its partners while ensuring the privacy of its customers.

Food safety

VeChain has also introduced a blockchain-based traceability system that allows consumers to track the origin and quality of their food products. The system monitors food products throughout the supply chain using sensors and smart contracts, ensuring transparency and accountability in the food safety industry.

Risks associated with VeChain

VeChain is a unique cryptocurrency project that stands out from the rest due to its centralized design. 

Unlike other projects that aim for complete decentralization, VeChain operates more like a large corporation, with a centralized structure controlled by the VeChain Foundation.

This approach has its advantages and disadvantages. On the one hand, the foundation has complete control over the project, which can provide a sense of security for investors. On the other hand, investing in VeChain means placing trust in the foundation, which may not appeal to everyone.

VeChain’s target market is businesses, which can be both a blessing and a curse. While it means that the project is focused on providing services to corporations, it also means that there is less incentive for individual investors to hold VET tokens. 

The staking rewards are also relatively lackluster, discouraging individuals from investing in the project.

VeChain news

Partnership with the United Nations

VeChain announced a partnership with the United Nations to use its blockchain to achieve the UN Sustainable Development Goals (SDGs) by 2030.

https://twitter.com/vechainofficial/status/1618359528898297856?s=20

VeChain released a post detailing the partnership’s objectives, emphasizing sustainability and a new concept called the “digital ecosystem,” which aims to help achieve the SDGs by 2030. 

Its roadmap for the next 18 months focuses heavily on sustainability, including building a carbon footprint explorer and model.

Partnership with Amazon

VeCarbon, an accounting SaaS program powered by VeChain, partnered with Amazon Web Services (AWS) to provide global-scale carbon management services. 

The partnership will provide VeCarbon with the computing power and resources required to deliver carbon management services. The platform offers low-carbon transformation tools and services to achieve sustainable development goals.

How to buy VeChain

If you’re interested in buying VeChain, you must set up a wallet that supports VET. You can buy VET on cryptocurrency exchanges, including Binance, CoinBase, and Kraken

Once you’ve bought VET, you can store it in your hardware/digital wallet and use it for transactions on the VeChain network.

How does VeChain staking work

VeChain staking involves holding VET tokens in a wallet to support the VeChain network’s security and earn rewards. 

When you stake VET, you’ll receive VeThor tokens as a reward, which can be used to pay transaction fees on the network. 

The amount of VeThor tokens you’ll receive depends on your staked VET and the duration of your staking period.

VeChain price prediction

As of Mar. 21, the VET token price hovers around $0.02. CoinCodex has estimated that the token’s price could rise by as much as 37% to hit $0.030725 by Mar. 23. 

Over the coming years, VET is predicted to soar to even greater heights. DigitalCoin has forecast the token’s price to reach $0.047 by 2023. Its VeChain price prediction for 2025 is that it could skyrocket to $0.0799. 

Although these predictions are based on current market sentiment, it’s important to remember that things can quickly change. Make sure not to invest more than you can afford to lose. 

VeChain: key takeaways

One of VeChain’s significant strengths is its practical application in real-world scenarios, with partnerships already in place with dozens of companies. 

Conversely, VeChain has not achieved the same brand recognition as some of its bigger rivals. While the most popular cryptocurrencies are household names, VeChain is still relatively unknown.

Overall, VeChain has enormous potential as an investment opportunity, but the market is highly volatile, as with any cryptocurrency. Be prepared for fluctuations if you choose to invest in VeChain.