Counterfeit consumer products are no joke. It’s a universal problem and a massive drain on the economy. The retail industries and brands around the world struggle to protect their products such as branded clothes, food, counterfeit drugs, electronics, etc.
Until now, there wasn’t any long-term solution to authenticate these products. Five years ago, VeChain, a relatively new blockchain-based platform, decided to have a go at it and add more weight to the claim that blockchain technology can be used for more than just completing quick and transparent money transfers.
VeChain’s blockchain-based authentication makes it possible for businesses to track their products from one end of the supply chain to the other and enables transparent information flow. Keep reading this guide to find out more about this project!
When the platform rebranded to VeChain Thor, it started using a two-token economic model with two different tokens: VeChain Token (VET) and VeThor Token (VTHO).
VET is a value-transfer medium and used for various business-related activities. Users owning VET are prioritized and have the right to perform more blockchain functions. The system automatically generates VTHO for these users.
VTHO is a utility token and is used to cover the expenses for using VeChain’s services, i.e. pay the transaction costs. Once the transaction gets executed, 70% of the VTHO tokens are destroyed (burned), while 30% goes to the Authority Nodes (more on that below!) as a block reward.
How Does VeChain Work?
The VeChainThor blockchain uses the Proof of Authority consensus mechanism which is in a way similar to the Proof of Stake method. Nodes earn voting rights judging by the size of their VET holdings and the level of their identity verification.
As stated in the white paper, this consensus algorithm is very efficient when it comes to network bandwidth usage. The system doesn’t spend a lot of time deciding who’s in charge of block production, so there’s more time left to broadcast the data itself. As a result, VeChain’s blockchain is characterized by high throughput, i.e. a high number of TPS (Transactions Per Second).
There are two types of nodes on VeChain’s blockchain:
- Authority Nodes.
VeChain’s blockchain has only 101 Authority nodes that have the right to validate all transactions. The precondition to becoming an Authority node is to own at least 25 million VET, complete an extensive KYC check, and own suitable hardware.
- Economic Nodes.
To become an Economic node, you need to own at least 1 million VET tokens. Nodes who haven’t done the KYC check but own 1 million VET get 20% of all votes, while those who have performed the KYC check successfully get 30% of the votes.
Economic nodes don’t validate transactions but offer stability to the system.
VeChain Use Cases
So, where does VeChain come in handy?
First of all, there’s the food sector that would benefit from VeChain’s anti-counterfeiting measures. The products are tracked with RFID chips that store and broadcast the information about the products on the blockchain in real-time. If it’s a medicine, the chip can be attached to the package.
If there’s any kind of problem with the product in the transportation process before it reaches the consumer, the sensors can quickly identify and solve the issue. Also, consumers can scan the QR code on a given product and check the source of the product, the ingredients, location, inspection report, even temperature data.
This was put to practice in June 2019, when VeChain launched the Walmart China Blockchain Traceability Platform together with Walmart China and PwC on the VeChain ToolChain™ platform.
The first batch of 23 product lines has already been tested and launched on the platform, with the announcement of 100 additional product lines. The product categories will include fresh meat, rice, cooking oil, mushrooms, etc.
The History of VeChain
Vechain is a Blockchain-as-a-Service or BaaS platform that aims to revolutionize the world economy with its innovative blockchain-based solutions and turn into a “smart economy”. The platform was launched in 2015 by Sunny Lu, who was the former CEO of Louis Vuitton China.
VeChain began as a side-project for one of the largest Chinese blockchain-oriented companies, Bitse. It was initially built on Ethereum’s blockchain but has switched to its own blockchain in 2018 called the VeChainThor blockchain.
The platform believes that blockchain technology is part of new-generation technologies such as AR, VR, AI, IoT, 5G, etc. VeChain plans on creating a “sustainable and scalable business blockchain ecosystem” to be adopted by businesses of all sizes in order to solve their economic problems, create smart contracts, and build various dApps. (VeChain’s White Paper)
Over the years, VeChain has partnered with some leading companies and has been receiving their support. Some of the most notable partners include the accounting firm PricewaterhouseCoopers (PwC), Jiangsu Electronics, a Chinese company that designs VeChain’s RFID chips, as well as the car company Renault.
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