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Counterfeiting high-end products cost more than $30 billion each year. For this reason, VeChain’s anti-fraud technology is attracting much attention in the crypto world.
What is VeChain?
Fighting fraud with VeChain. VeChain wanted to simplify supply chain management using the blockchain. VeChain developers wanted a way to determine if an actual product is fake or not, avoiding fraud and counterfeits. Since then, large companies have used VeChain to control everything from wine production to car manufacturing.
It is simple: give each product a unique identity, then use sensors to track any event inside each supply chain stage. In this way, companies can be sure that the supply chain handles the products correctly, and buyers can verify that their acquisition is genuine.
Vechain is blockchain-focused on the supply chain. Rather than being a blockchain for everything, VeChain took a specialized approach to its development. Its primary function is to track the movement of goods and services through the supply chain.
Additionally, it has joined forces with PricewaterhouseCoopers (PwC), one of the Big Four, which has helped promote the VeChain blockchain to customers. A former PwC executive is the COO of the VeChain Foundation, and a current PwC executive sits on the steering committee.
How does VeChain work?
VeChain gives physical items a unique identity, typically via RFID (Radio Frequency Identification), QR codes, or NFC (Near Field Communication). The sensors register data at each supply chain step and link it to the product’s identity. Bosch and Qualcomm are manufacturing the sensors designed by Vechain.
Using blockchain technology, no one can modify the stored data. This characteristic allows you to record how conditions were throughout the supply chain accurately. If something goes wrong, like shipping goods to the wrong place, the blockchain log will show precisely where the error occurred.
It also allows the merchandise recipient to check that everyone handled the items correctly and was authentic. This function is crucial to combat fraud in the luxury goods sector, such as high-end articles. Manufacturers place a small inside object. When scanned, the article reports the processes it has gone through from production to delivery. That chip remains even after the store sells the bag. The buyer can now verify the origin and authenticity of re recently acquired bag.
The cryptocurrency
VeChain initially issued a few tokens (VEN) in Ethereum before launching its platform in 2018. They rebranded the new platform as VeChainThor, known as VET. VET is the payment used in the VeChain system. The more VET a person or company owns, the higher the priority will be using the blockchain’s resources.
You can also use VETs to generate a second type of token, VeThor or Thor Power (VTHO), to access supply chain technology. Thus, a company that wants to use VeChain tracking for its supply chain has to pay VTHO to add more information to the blockchain.
VeChain users can also stake their VETs for passive income through VTHO. We must have the VETs in a network wallet that remains online for a preset period. With staking you never transfer or move your funds to other accounts. You can read about the Cardano Staking process in this post.
The platform
Other blockchain projects can use the Vechain platform to issue tokens, similar to ERC20 tokens on Ethereum. This platform has helped VeChain go from just a supply chain to Dapps. There are different mechanisms to achieve consensus in distributed networks. One of the most common is Proof of Work (PoW), closely related to Bitcoin mining. The first node to crack a crypto challenge takes the reward.
VeChain uses Proof of Authority (PoA) as a consensus protocol. It is unnecessary to solve the challenge as only a group of computers called “validators” can approve the block. Each validator runs a node that validates new blocks, making transactions much faster than proof-of-work and Proof of Stake (PoS) protocols.
Specifically, the VeChain network has a group of Masternodes to achieve consensus. This strategy significantly improves transaction times. And before you can validate blocks in this system, you need to complete the KYC and AML identification verification. Interestingly, VeChain also uses inexpensive master nodes. These nodes act as a governance network to vote on issues related to the VeChain platform. For every 10,000 VET that you own an economic master node, you will get one vote.
VeChain use cases
Food safety. Companies can deploy VeChain-enabled Internet of Things (IoT) devices throughout the supply chain, including products, vehicles, and warehouses. Environmental and location data from these devices can then be uploaded, verified, and stored in a decentralized and tamper-proof manner on the VeChainThor blockchain. Several companies are developing similar, including Shenzhen Yuhongtai Foods.
Fighting fraud & counterfeits. Counterfeiting in the luxury goods market is a severe problem. Owners can be sure of its authenticity by placing an encrypted chip and using it to record and track logistics, warehousing, maintenance, and resale. VeChain has been used in luxury wine tracking for Shanghai Waigaoqiao Direct Imported Goods and testing Renault luxury vehicle components. In 2016 VeChain applied this technology to allow Renault’s automobile company to track vehicle history. Renault began to keep track of maintenance, mileage, and anything else that has happened to the car from the moment it left the car factory. Second-hand car buyers can access this immutable record for a complete vehicle account.
Medical records. Instead of using inefficient and insecure record systems for lab results, you can store this valuable data on the blockchain, accessible only to patients and other authorized parties. In 2021, the H-HCert launched an app for the Mediterranean Hospital of Cyprus and the Aretaeio Hospital in Nicosia.
Carbon Emissions Tracking. By driving the reduction of carbon emissions by tracking the activities that emit them, this solution enables consumers to participate in a carbon savings program. When smart devices, such as cars or appliances, show consumers generate less carbon, they can receive credits to use them in energy services. BYD, a Chinese electric car brand, already operates a Vechain solution.
Banking Data. Vechain stores data from bank accounts and businesses for an entire administrative region collaborating with the Chinese government.