What makes VeChain unique?
While many blockchains are all-purpose platforms that do just about anything you can program into them, VeChain is much more specialized. The basic idea is that it provides both a unique ID and a sensor to track a physical product. It then records information as the product passes through the supply chain.
Here's a few examples of how this technology can be used by businesses:
- A luxury fashion designer can install VeChain chips in its handbags so that buyers can verify if bags are real or fake.
- A grocery store can track food products with VeChain. If there's a disease outbreak related to a specific product, the store can use tracking data to determine which products it needs to recall.
- Auto manufacturers can store data related to specific cars on VeChain. Future buyers will then be able to look up information related to the car and confirm that nothing has been tampered with such as the mileage.
- In addition to supply chain solutions, VeChain has continued to diversify and modernize its ecosystem capabilities, including adding support in 2022 for a fiat-backed stablecoin (VeUSD) to support DeFi and Web3 projects.
VeChain is also unique in that it has two native tokens. Most blockchains have one -- for example, Ethereum (ETH -3.67%) uses ETH tokens as its native cryptocurrency, and Cardano (ADA -5.31%) uses ADA tokens.
The primary token on VeChain is VET, which is used for storing and transferring value. It also has VeThor Token (VTHO -4.30%), which is used for transaction fees. VeChain separated the two so that the token used for transaction fees would have a stable price.
Where VeChain came from
Sunny Lu, the former CIO at Louis Vuitton China, founded VeChain in 2015. He is also the CEO of the VeChain Foundation, which launched in 2017.
VeChain started out as a crypto token built on the Ethereum blockchain. VeChain raised funds in an initial coin offering (ICO) in 2017. In February 2018, VeChain rebranded as VeChainThor (VET), its own blockchain. In June 2018, Ethereum VEN tokens were exchanged 1:100 for VET tokens, and the VeChainThor blockchain network officially began operation.
Unique risks
Cryptocurrency projects typically aim for decentralization, but that's not the case with VeChain. It's built more like a large corporation with a centralized design, and it has a relatively small group of transaction validators due to its proof-of-authority system.
This isn't necessarily a bad thing. It just means that the VeChain Foundation is in full control of the project, and, if you're going to invest in VeChain, you'll need to trust in the foundation behind it.
As previously mentioned, VeChain is aimed at businesses, which has its benefits and drawbacks. The downside is that there's less incentive for individuals to hold VET tokens. They don't need it since they aren't the target market for its services, and the staking rewards are lackluster.
Is VeChain a good investment?
VeChain has some key things going for it as an investment. It has real-world utility and it's currently in use through partnerships with dozens of companies. That's a welcome departure from blockchain projects with poorly defined objectives and only theoretical utility.
There's a strong group behind VeChain that has done an excellent job of pushing it forward. Equally important, VeChain and its team haven't gone through any scandals or been involved in shady business.
On the other hand, VeChain is lacking in terms of brand awareness. While some of the biggest cryptocurrencies have become household names, VeChain isn't as well-known or widely talked about.
It's easy to see the potential of VeChain, and it's one of the better cryptocurrency investments. Keep in mind that, just like other cryptocurrencies, the value of VeChain is highly volatile, so be prepared for the ups and downs if you decide to invest.
How to buy VeChain
To buy VeChain, register for an account with a crypto exchange that offers it. Availability can be hit or miss, but here are a few popular crypto exchanges that support VeChain trading:
- Crypto.com
- Binance.US
- Binance (not available for U.S. residents)
VeChain doesn't get as much attention as the most popular cryptocurrencies, and it's somewhat undervalued when you consider its real-world applications. Those looking for an alternative to the usual crypto investments should consider VeChain.
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