What is VeChain? A 9 Minute Read to Set You Straight

Published: 10th February, 2023 | Last Updated: 19th April, 2024

Markos Koemtzopoulos

Markos Koemtzopoulos is the founder and main writer of ElementalCrypto. He has been a lecturer at the University of Nicosia on cryptocurrencies and DeFi and has taught two courses on crypto and blockchain technology.
what is vechain
Wondering what VeChain is? I’ve got you covered

So I found the following interesting nugget of information last week: what do you think is the largest type of organized crime?

As in mafia style?

Is it money laundering? Nope. That’s big at about $2Bn but there is other stuff you could go to jail for that bring in way more money.

Could it be fraud and extortion? Na-ah. That’s bigger at $31Bn but nowhere near the top.

How about human trafficking? No again. Human trafficking also has a market size of about $32Bn per year.

Oouh! I know! How about Cyber crime? It’s got to be cyber crime!

You are getting closer. Cyber crime is much larger that other types of rackets and worth about $200Bn per year to mobsters.

mafia boss
What business would you get into if you were the BOSS

However, there is one type of organized crime that stands out from all of the rest. If you were a mafia boss you’d want to get in on this one.

I’m talking about counterfeiting and contraband. The market for counterfeit goods is worth a whopping $600Bn per year.

And there is a blockchain that sees an opportunity in putting things right. Its name is VeChainThor, colloquially known as VeChain. Let me tell you about it.

What is VeChain?

VeChain is a blockchain-based supply chain solution that verifies and tracks the journey of goods as they travel around the world to reach consumers.

By using VeChain, companies in any industry can maintain visibility and control over their manufactured and sold products.

For example, BMW uses VeChain to combat odometer fraud, and Walmart uses it to monitor certain food items in its supply chain.

supply chain
Supply chain

Imagine how useful it would be if a pharmaceutical company could trace the path of drugs to ensure against leakage and skimming. Remember that vaccine that you needed to store in like -200 degrees?

What if there was a way for you to know if and when a batch had been exposed to an unacceptable temperature? You could take action to get rid of the batch and make sure it does not happen again.

I’ll give you another example.

Consider the ability to trace the origin of your food for guaranteed safety.

The World Health Organization estimated that 1 in 10 people globally fall ill after eating contaminated food.

With VeChain, if there was a shipment that gave people a bad stomach, you could trace it back through its production and distribution journey to recall it and figure out where things went wrong.

VeChain provides an enterprise-grade blockchain solution that empowers companies to monitor products from manufacturing to consumption, guaranteeing quality and enabling swift identification of any discrepancies.

What’s so special about VeChain?

OK, so VeChain serves as a means for tracking the movement of goods from point A to point B. But why is a blockchain necessary?

Can’t traditional methods where you attach an identity tag to physical goods, such as RFID, NFC, and QR codes connected to databases, suffice?

Isn’t this already a thing?

rfid tag
RFID (Radio Frequency Identification) tags use radio frequency to search, identify, track, and communicate with items and people.

The answer is yes and no.

These methods have been used in supply chain management for years and more recently have been getting hooked up to the internet to allow for seamless tracking and automation.

You will have come across this as the Internet of Things.

VeChain utilizes the same technology but places them on a blockchain. This ensures everything is tamperproof.

VeChain ensures accountability

Consider a scenario where a retailer marks all goods as accounted for and then transmits this information to VeChain. The data is then stored on the blockchain, remaining forever accessible for verification.

This solution not only streamlines the tracking and accounting process for businesses but also addresses issues of data integrity. The information is impossible to fake or tamper with.

Luis Vuitton counterfeit
Real or counterfeit?

Luxury brands, for instance, often suffer financial loss due to counterfeiting, while food companies need to pinpoint any supply chain issues with precision.

Imagine being able to scan the QR code on a log of beef at the grocery store.

You scan it with your phone and are able to tell when it was transported to the store and whether it dropped below a certain temperature on the way or not. Or say you are buying a purse. You can scan a code to know if it is genuine or counterfeit.

VeChain’s blockchain technology offers the same advantages to supply chains that Bitcoin offers to digital ledgers – the prevention of data manipulation and tamper-proof storage.

By eliminating the need for trust, VeChain increases consumer confidence, reduces supply chain costs, and improves product safety.

Let’s take a look at how the blockchain works under the hood.

How VeChainThor works

The VeChain blockchain initially launched on Ethereum.

The token was an ERC-20 token called VEN.

But soon after the VeChain team realized that Ethereum was too slow and gas fees too high for the solution to be attractive to companies.

As a result in 2018, VeChain relaunched its own blockchain: VeChainThor

Let’s take a look at how the consensus protocol works on this blockchain because it is different from what you are used to.

VeChainThor blockchain consensus mechanism

Bitcoin uses Proof of Work (see What is Bitcoin). And Ethereum uses Proof of Stake.

But VeChainThor uses a fancy consensus algorithm called Proof of Authority. Basically, it means that there’s a group of known, authorized validators called Authority Master nodes.

These entities are hand-picked by the VeChain Foundation so they’re not anonymous. As a result, contrary to most blockchains, the system is pretty centralized.

But the logic is that the VeChain platform is an enterprise solution. Companies care less about decentralization and more about speed as long as they are working with authoritative entities. The VeChain Foundation is kind of like a referee ensuring only quality trustworthy validators are participating.

However, Authority Masternodes are also required to stake $25 Mn in VET so, apart from putting their reputation on the line there is an additional economic incentive to be truthful.

Let’s talk about the token in a little more detail.

VeChain’s two-token system

Yeah, so VeChain is somewhat unconventional in that it uses two tokens:

  1. The first is the VeChain token (VET), the currency used within the VeChain ecosystem. All blockchains like to complicate things with their own terminology so VeChain calls the VET coin “smart money” because you use it to settle smart contracts. The simplest way to think of VET is as the medium of exchange within VeChain. In addition, you can use your VET tokens to stake them.
  2. The second token is called VeThor (VTHO). The VeThor token is used to pay transaction fees. You know how on the Ethereum blockchain you need to pay for transactions in ETH and they call them gas fees? Well similarly on VeChain you need to do the same, except they issue a separate token for this and they call it “energy”. The reason they issue a separate token is so that its price is less volatile compared to the VET token. So far this hasn’t worked out. VTHO seems to be just as volatile as VET. Also, staking rewards from VET tokens are paid in VTHO. So you stake the currency to get the fuel or “energy”. The VeChain Foundation can fully adjust VTHO. They can act like a central bank to print or burn VTHO so as to ensure stable transaction fees. Currently, 70% of transaction fees are burned and 30% are paid to VET holders.

Where to buy VET and VTHO

Currently, you can purchase VET and VTHO on the following exchanges:

You can find more here. Basically, you can buy it on all the Chinese-origin exchanges. Coinbase and Kraken do not offer it but if you are in the US you can get it on Binance.us

For a full list of exchanges that offer VTHO check out coinmarketcap’s markets page.

The story: how VeChain came to be

What is the most iconic brand that suffers from counterfeit goods?

If Luis Vuitton comes to mind we think alike.

For luxury goods companies like Luis Vuitton counterfeit products are a massive problem eating into their margins.

Sunny Lu VeChain founder
Sunny Lu, creator of VeChain and former CIO of Luis Vuitton China.

In 2015, Sunny Lu left his position as CIO of Luis Vuitton in China.

He saw the big problem that Luis Vuitton was facing as a massive opportunity that needed a solution.

Blockchains had just entered the scene and were promising more transparency in the world.

Lu launched the first iteration of his solution on Ethereum which was a general-purpose blockchain to do anything (What is Ethereum).

He soon pivoted and decided to build a custom blockchain that could process transactions faster and cheaper.

VeChain today can process as many as 10,000 transactions per second which is pretty neat considering that Ethereum processes 10-15 per second.

VeChain business partners

I was impressed to see the list of companies that are using VeChain. It illustrates how this blockchain has real-world application. Here are some of the companies they are working with.

  • Walmart to track food
  • Renault stores the car’s history such as past accidents and maintenance reports in a digital car maintenance book. This will contain all the things you would want to know about a second-hand car.
  • BMW has also picked up on the same idea to create a digital passport for their vehicles which will contain mileage, repair history, and so on.
  • H&M lets consumers verify that clothes are indeed organic through their traceability platform called My Story.
  • DNV GL which is an accredited registrar and classification society
  • UFC
  • PwC
  • Microsoft
  • DHL
  • Volkswagen
  • Givenchy

VeChain’s bit bet: VeCarbon

The biggest product that VeChain has been working on is VeCarbon. VeCarbon is a supply chain solution that aims to companies track and reduce carbon emissions at every stage of production.

VeChain has partnered with Amazon Web Services to store and manage the data on cloud infrastructure and seems to have the buy-in of the Chinese government which has set carbon reduction strategies in place.


VeChain is placing considerable attention on NFTs. They have recently integrated with XP.Network to make VeChain interoperable with other chains that offer NFTs. Some of their most popular collections are VeKings, VeGhosts, and VeKongs. While they dabble in the more fun side of NFTs they could put NFTs to other uses.

VeChain is interested in alternative applications of NFTs such as their ability to represent ownership and identity. Insurance certificates, voting ids, and representation of real assets are what particularly draw their attention

Then you should also be aware that in February 2022 they launched VeChain 2.0 which is a blockchain data explorer plus they launched an interface called Connex that makes it easy to build Dapps on VeChainThor. This way they are hoping to develop a DeFi ecosystem.

They also have plans for a VeChain naming service just like Ethereum has ENS and Cardano has Handles. And they plan to launch decentralized file storage.

Finally, they plan to copy Ethereum to launch L2 rollup solutions. If you don’t know what this is read my explanation of Arbitrum to understand them better.

VeChain has also launched a stablecoin called VeUSD. This is similar to USDT in that it is backed 1:1 by UD dollars. To do this they have partnered with Stably.

Finally, VeChain Foundation has a partnership with Draper University. Draper Ventures was one of the original investors in VeChain in 2017. Draper University likens itself to a preschool for startups. VeChain currently offers fellowships for future founders.

VeChain price prediction

I hate making predictions. Making predictions about the future of any cryptocurrency, including VET, is inherently uncertain and subject to many variables. So don’t take this as investment advice muchachos. But let me attempt this anyway.

VET price trend
VET price trend

First, let’s do a naive calculation. VET reached an all-time high of $0.25 in April of 2019. It currently trades around $0.025 so if it were to reach its all-time high again that is a nice 10x. Even if it reaches it lower peaks of $0.1 we’re looking at 4x. So not too bad. Of course, nothing guarantees that VET will go to those levels again. Like I said this is not financial advice.

The maximum supply of VET is 86Bn with a circulating supply of $75Bn. So supply can increase by about another 14% which is not too dilutive. Also, keep in mind that there are about 100 nodes and each holds a minimum of 25Mn 2.5Bn VET locked up in nodes. While VeChain releases a quarterly report there is limited information on the vesting schedules of investors. So it’s hard to predict if someone will suddenly dump a bunch of VET on the market and push the price down.

VET token allocation
VET token allocation. Source: coingecko.com

Considering the token distribution private investors were allocated 9% of VET so I do not think this risk is massive.

More recently the price of VET has been following the general uptick in the crypto market which in turn is emulating the stock market.

The first line of resistance is at about $0.028. The second is at around $0.034. I would not bet my life savings on these positions but you could take a stab at them with a small allocation. Make sure to set a stop/loss in case the price turns and comes plunging down again.

VET price prediction
VET price prediction

Right! Time to wrap up.

Summing up VeChain

In conclusion, VeChain is a blockchain platform that offers a comprehensive solution for enterprises to track and manage their supply chain.

It provides a secure, transparent, and efficient way to monitor the entire product journey from manufacturing to consumption.

With the integration of blockchain technology, VeChain offers a unique and innovative approach to supply chain management, creating a new standard for quality assurance and product traceability.

Overall, VeChain has the potential to revolutionize the way businesses approach supply chain management, and its adoption is expected to grow in the coming years.

In a podcast interview, Sunny Lu says that supply chain SAS solutions are a great entry level for businesses to migrate to blockchains.

Given the number of partnerships VeChain already has I think he is on to something.

Useful resources

Markos Koemtzopoulos is the founder and main writer of ElementalCrypto. He has been a lecturer at the University of Nicosia on cryptocurrencies and DeFi and has taught two courses on crypto and blockchain technology.

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