Is VeChain (VET) a Good Investment? In-depth Analysis and Near to Longer-Term Expectations

vechain

Blockchain technology has come a long way since it started with Bitcoin. Back then it was only a digital currency payments network, but now it has turned into something much more. It has become a pathway to decentralizing numerous processes in numerous industries.

Of course, that has become a bit of an exaggerated selling point for the technology. It is possible to decentralize a lot of industries and systems, but not everything. But if there’s one industry that has been universally acknowledged as benefiting from blockchain technology, it is the supply chain industry.

The supply chain industry underpins much from the trade that occurs between countries and is a fundamental pillar of the global economy. It is estimated that the supply chain industry is a multi-trillion industry that, in the United States alone, is worth about $1.5 trillion. Globally, this value is many times higher.

Following the rapid rise of e-commerce – most notably Amazon – supply chain incumbents have encountered new challenges, forcing them to adapt to the changing global economy or perish. New software and infrastructure have become key focuses of these entities, as they seek to leverage new technologies as companies in the dotcom era did.

The biggest pain points of the industry have to do with the obsolete systems and processes of the industry, as well as the reliance on paper to keep track of shipments. This system, while it has served us well so far, is prone to human error and delays.

This is where blockchain technology comes in, It can revolutionize and streamline the industry by virtue of the fact that it can remove the middlemen in the industry, i.e. reduce the room for human error, and provide real-time updates on shipments with the combination of sensors and tags. Efficiency, traceability and authenticity can be boosted immensely by blockchain technology.

The project I’ll be talking about today is VeChain, which is one of the most prominent supply chain focused projects in the space, having made much progress in building solutions for such things as the agriculture, tobacco and retail industries.

I will quickly go over what VeChain is, the platform and its technology, the solutions it has already offered, as well as its potential returns on investment.

What is VeChain (VET)?

VeChain’s official videos showcasing applications.

VeChain (VET) was founded in 2015 by Sunny Lu, former CIO of Louis Vuitton China. The project conducted its ICO in August 2017, raising roughly $20 million.

While VeChain is primarily considered a disruptor of the supply chain industry, its overall scope covers several emerging technologies, including the Artificial Intelligence (AI), Internet of Things (IoT), Virtual Reality (VR), Augmented Reality (AR) and 5G networks.

VeChain target groups are very much enterprise entities, marrying a “governance structure, a robust economic model, and advanced IoT integration” to bring blockchain technology and tokens to incumbent industries.

VeChain transaction features

Some of the VeChain’s features. Source.

The particular benefits that the VeChainThor blockchain aims to bring have to do with traceability, anti-counterfeiting, food safety, intellectual property management, product-lifecycle management and data provenance. All of these are important in the supply chain industry, which is fraught with related problems because of its reliance on obsolete systems and use of paper.

The project is currently in its “business consensus” phase, meaning that it is attempting to get enterprises to join in on the blockchain train and adopt solutions that they may need for their particular use case. VeChain’s whitepaper states,

With more and more influential public corporations, entities, organizations, and large global scale of people involved in the development and adoption of blockchain platforms, we can expect governments and countries (especially small and progressive countries) that are aiming for progressive policy, economics and technology advancement to gain strategic advantages.

Essentially, VeChain believes that its platform will soon attract some major players from across the world. That remains to be seen, so monitor the project carefully.

The next stage in VeChain’s growth and development is the governance consensus stage, the team imagines that, along with KYC and AML procedures, new applications and systems will be put in place that attract more stakeholders to the system (whether a governmental body or individual), as well as the release of such things as stablecoins, settlement coins and utility tokens.

Now let’s move onto the technology that powers the VeChain platform.

The VeChain Platform and Technology

A quick preview on how the tech behind VeChain.

The major features that make up the core of the VeChain platform are its Proof-of-Authority (PoA) consensus algorithm, its dual token economic model, and its focus on IoT and other technologies.

VeChain masternodes

VeChain’s masternodes play a big role in the platform’s governance. Source.

VeChain’s Proof-of-Authority algorithm uses masternodes are in charge of the VeChainThor blockchain’s protocol. The team claims that this consensus mechanism results in reduced usage of power to achieve network security, avoids hard forks and increases efficiency. There also exists built-in smart contracts for governance, where a community elected steering committee “facilitates decision making and execution supported by the on-chain governance mechanism.”

VeChain token model

VeChain’s dual token system. Source.

VeChain has two tokens on its platform: VET, also called “smart money”, and VTHO, also called “energy”. The purpose of this is to “separate the cost of using blockchain from market speculation.” VeChain’s Foundation also stabilizes the cost via a governance mechanism. The idea is to prevent transaction fees from being directly affected by the fluctuation of the VET token. VET is used for business and financial activities, while VTHO is used for token transfers and smart contracts.

Going into the future, VeChain will put a lot of emphasis on emerging technologies, though we still have a lot to hear regarding that.

VeChain’s Achievements

VeChain has partnered with international accredited registrar and classification society DNV GL.

VeChain has achieved a surprising amount in its lifetime, most notably managing to work with several governmental bodies to the end of bettering various industries. China is known to be keen on blockchain technology – not a day goes by where we don’t hear China announcing some new pilot or intention – and the fact that VeChain has managed to find a place here is quite something.

VeChain has partnered with several notable entities – and some of these companies are heavyweights in their respective space. This gives VeChain a great deal of credibility. Partners include PriceWaterhouseCoopers (PwC), DNV GL, China’s National Research Consulting Centre, BMW, Haier and Walmart China. For a full list of partnerships, take a look at this compilation of VeChain’s partners.

The biggest of these achievements is arguably the pilots it has run with DNV GL and PwC, which made quite the rounds when it was announced. With the former, it is working on a low carbon initiative, while the latter is working with it and Walmart, having launched the Walmart China Blockchain Traceability Platform.

While we’re at it, why don’t we take a better look at some of the biggest partnerships?

A List of VeChain’s Major Partners

This list is by no means exhaustive, but it does cover some of the major partnerships.

1. DNV GL

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DNV GL is a Norwegian international accredited registrar and classification society headquartered in Høvik, Norway, and is a subsidiary of Det Norske Veritas Holding AS. The company is well known for providing services in various industries, including  maritime, renewable energy, oil & gas, electrification, food & beverage and healthcare. It is the world’s largest classification society.

DNV GL and VeChain have done much together, and it seems like the former is very keen on leveraging VeChain’s solutions. The two parties announced their partnership in January 2018, though much has occurred since then.

The point of the partnership is to improve the transparency and efficiency of product and supplier information. An example of how this will manifest is the use of Internet of Things (IoT) and sensors to better get a sense of product information and history.

This has led to actual results, like the creation of the MyStory app, which gives consumers the history and journey of products. Consumers have been shown to become increasingly socially and environmentally aware, so this is an excellent creation from one of the biggest players in the supply chain industry.

2. PriceWaterhouseCoopers (PwC)

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PriceWaterhouseCoopers, or PwC as it commonly known, is one of the “big four” accounting firms (all of whom have shown interest in blockchain technology). Providing services to over 400 of the Fortune 500 companies, and with a revenue of over $40 billion, PwC plays a big role in accounting, assurance and advisory.

PwC and VeChain first announced the partnership in June 2018 – and PwC actually acquired a small stake in VeChain! Since the acquisition, PwC and VeChain have worked closely, the most notable of developments being the blockchain traceability system built in collaboration with Walmart China. The systems allows customers to scan QR codes to obtain information about the sources of goods, geographical location, product inspection records and logistics related data.

3. Walmart China 

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Walmart is one of the biggest retail names in the world, and with the recent announcement that Walmart China would open an additional 500 stores in the country – you know that there’s a lot of potential for VeChain to gain exposure.

Walmart itself is the world’s largest company by revenue, raking in over $510 billion a year. It is also the world’s largest employer, with over 2.2 million employees. Walmart China is considered to be one of its more successful ventures.

As far as collaboration with VeChain is concerned, Walmart China has only worked on the aforementioned blockchain traceability system. However, given that the results of that look good, and the company in question, it is a big, big feather in the cap for VeChain.

4. National Research Consulting Center (NRCC) 

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China’s National Research Consulting Center (NRCC) is a national consulting body which involves itself in several industries, including government administration, tobacco, financial services and infrastructure, oil and gas, and agriculture, among others. The NRCC “specializes in the professional development of domestic companies, or organizations, that actively seek international standards and approvals.”

Under the guidance of DNV GL, the NRCC and VeChain have partnered to the end of providing blockchain based solutions for China’s tobacco industry, which accounts for nearly 30% of all of the world’s tobacco consumption.

This effort will include roof-of-origin and anti-counterfeit technology on tobacco products. With well over a trillion Yuan in sales, VeChain has latched onto a strong market in the nation, giving it great exposure and a chance to cement itself in a prominent industry.

5. BMW 

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BMW really needs no introduction, being one of the world’s largest automobile manufacturers. The German company produces over 2.5 million automobiles and generates a revenue of nearly 100 billion Euros.

The partnership was announced at the first VeChain summit, which was held in April 2019. Cihan Albay, Leader at IT Tech Office Singapore BMW Group, announced that BMW was looking for a solutions provider to help them turn IT solutions into business use cases. He identified 3 blockchain use cases: mobility services (sharing cars, like an AirBnB for cars; supply chain improvement (traceability and document management); and loyalty programs for customers.

These first and third use cases are especially innovative uses of blockchain technology, and VeChain struck big in getting BMW to consider their platform. VeChain has entered the collaboration via BMW’s Startup Garage, a program where BMW becomes a venture client of approved startups. Besides the use of VeChainThor, this collaboration grants a great deal of legitimacy to VeChain.

6. Renault

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Like BMW, Renault is a big name in the automobile industry. The French automobile manufacturer has over 100 years of history, launching in 1899. It operates in 128 countries and has a 43.4% stake in Japanese automobile manufacturer Nissan – and this gives VeChain good access to Asian automobile markets as well.

VeChain’s partnership with Renault was announced in 2017. The partnership will result in the creation of a digital car maintenance book based on blockchain technology. Every vehicle is given a unique identity that is stored on the blockchain. Besides being able to give customers individualized data, the platform could also speed up maintenance and mechanical work by sending real-time data to garages and Renault, resulting in better efficiency and manufacturing results.

7. Yida China Holdings Limited

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The Yida Group is a three decade old real estate group based in China. It is one of the country’s largest business park developers and operators, and its businesses also cover software information, information technology, education, modular machine tool manufacturing, cold-chain logistics, real estate development, property management, among others.

VeChain and the Yida Group signed a deal in February 2018 with the goal being that VeChain would develop solutions for the latter on the VeChainThor blockchain. The first phase of this project will integrate “Gui’an smart city administrative solutions into existing projects.”

Yida has a focus on developing smart cities, and VeChain’s focus on IoT and emerging technologies will certainly come in handy here.

8. NTT Docomo 

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NTT Docomo is the biggest mobile phone operator in Japan, providing phone, video phone, mail, and network services in Japan.

Announced in August 2018, the partnership between NTT Docomo and VeChain is focused on 5G networks, which the latter is very keen on. VeChain is part of the first batch of partners in the 5G Open Partner Program launched by NTT Docomo.

VeChain wishes to provide next gen services through 5G, and in return, VeChain has stated that it will “enhance and enrich our current data services capacity within traceability, supply chain management, and smartphones for our users.”

9. Haier 

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Haier is a Chinese multinational home appliances and consumer electronics company. It produces all sorts of home appliances and electronics, and Euromonitor states that it is the number one brand globally in major appliances for 10 consecutive years from 2009-2018.

In April 2019, it was announced that VeChain, DNV GL and Haier would work together to integrate the VeChainThor Blockchain-based clothing traceability solution into Haier IoC facilitating the Digital Carbon Ecosystem (DCE). This will go on to encompass smart shopping, smart inventory management, and tracking.

10. Republic of Cyprus

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The national investment partner of the Republic of Cyprus, Invest Cyprus, is the “government’s dedicated partner responsible for attracting and facilitating Foreign Direct Investment (FDI) in key economic sectors.” In other words, Invest Cyprus plays a big role in revolutionizing various sectors in the country.

The partnership was announced in October 2018. Along with CREAM, a blockchain and cryptocurrency advisory firm, VeChain and Invest Cyprus have established a joint entity in Cyprus, with the goal of developing and implementing blockchain solutions for the country.

It is no small thing to be able to collaborate with a body so close to a country’s government, so VeChain has a phenomenal partnership in the form of this partnership. It would be of great benefit to VeChain’s reputation if and when there are demonstrable results.

Price History

VeChain price

VeChain’s price at the time of publishing. Source.

Here’s a bit of a problem for potential investors: the VET token has proven to be a loss for ICO investors. Current Return on Investments (ROI) for the VET token is at -63%. This does not speak very well for the project as an investment choice, though investors will still want to give some consideration (and I talk about why below).

The token is currently ranked 29 on CoinMarketCap, with a market cap of approximately $307 million and the VET token price being $0.0055.

VeChain price chart

VeChain’s price chart. Source.

The VET token’s respective all-time high and all-time lows are $0.019 and $0.002 respectively. The former occurred in September 2018 and the latter far more recently in October 2019. 52 week highs and lows tell a similar story, with the respective prices being $0.010 and $0.002.

Now, with these numbers, VeChain may not seem like a very good investment. But is there potential in the future? Is there anything that gives it a sense

Can VeChain Recover and Go Higher?

Right off the bat, I’ll tell you that there is good investment potential in VeChain. For one thing, projects working to disrupt the supply chain space have a lot of potential because of how suitable blockchain technology for the industry. On top of that, this is a project that has made great inroads in several verticals in the supply chain industry with demonstrable results.

The combination of working with big names, the successful launch of various platforms and the addition of several new features in the new feature actually make VeChain at least worth looking at. Previous price history does not offer a full picture with respect to how a project might pan out.

One thing is for certain: the supply chain industry is ripe for disruption with Distributed Ledger Technologies (DLT). Other notable supply chain projects include WaltonChain (WTC) and OriginTrail (TRAC). There’s definitely going to be some project and platform that benefits as more enterprises hop on board the blockchain bandwagon. There’s no guarantee that VeChain will be the platform, but it has done a lot, so it is worth keeping an eye on.

Conclusion

VeChain is certainly a worthwhile investment consideration, given that the project has actually made tangible progress in several areas, not the least of which is its joint operations with government bodies. The project has a tendency to attract flak from the cryptocurrency community, oftentimes being mocked for its marketing tactics, but the results are what speak the most.

Even if you are a little hesitant about investing in VeChain, consider keeping an eye on supply chain related projects. Perhaps the project will see its token quickly rise in the near future, perhaps not. If you are okay with a little risk, then maybe VeChain is worth your time and money.

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