Vechain has made immense gains over the past couple of months on both its valuation and social outreach. More and more people have heard about this business since the rebranding event that took place on February 26th. During that, Sunny Lu (VeChain CEO), announced a partnership with BMW. Partnerships like this bring many new investors and speculators looking for existing information on the project. For that reason I decided to introduce people to some older partnerships and delve into what I think makes VeChain (VEN/VET) great. And those are the non-whitepaper, a couple of the executive members, the partnerships, the development plan, and the general culture within the VeChain Foundation.
Non-Whitepaper and Development Plan
Yes, VeChain has not released an official whitepaper yet. However, they have presented a highly detailed non-whitepaper that lays out the development plan for the VeChain foundation. In this they lay out a budget for funds, some basic tech speak, the vision, and give a general idea for the VeChain culture among numerous other things. I highly suggest you check it out! Clearly this development plan is a great alternative to an official whitepaper. I highly suggest you check it out before going on further to get a good idea on how a crypto company could succeed without a whitepaper.
https://cdn.vechain.com/vechain_ico_ideas_of_development_en.pdf
Introduction of CEO and CTO
Sunny Lu - CEO
VeChain’s current CEO is Sunny Lu. Previously Sunny was the Chief Information Officer, Information System and Technology manager, and Chief Technical Officer for Louis Vuitton China. As well he has previous work experience as an IT Manager for Bacardi China. At the VeChain launch party Sunny came off as a pragmatic and goal-oriented CEO who was focused on the future, as opposed to initial success. He lightly ribbed multiple coworkers and showed throughout a 45 minute long speech that he was able to lead from the front with poise and confidence. His laid back attitude comes off with an air of confidence as opposed to arrogance. His connections and success in the Chinese luxury goods market will certainly benefit him in the future.
Gu Jianliang – CTO
The Chief Technology Officer, Gu Jianliang, has prior experience working for TCL and Alcatel where he worked on and designed multiple mobile communications devices for T-Mobile, AT&T, Vodafone, and Deutsche Telekom. His experience in related industries exceeds 18 years and over 100 patents in relevant fields covering everything from integrated circuit design, mobile device power management, and enhanced traceability through Near Field Communication (NFC) technology. Mr. Jianliang is certainly what I would consider an all-star player when it comes to the development of new technologies. In an article released by VeChain introducing Gu it was stated that, “Mr. Gu has helped VeChain apply and obtain patents since joining.” These patents include one that covers VeChain’s Thor and how it is utilizing NFC technology for it’s product tracing platform. Furthermore, VeChain stated that, “Mr. Gu has had a large impact on VeChain’s ability to rapidly secure and patent its core technology and we fully expect that trend to continue moving forward.” NFC tech has huge implications in the internet of Things (IoT) market, as this is the technology that generally connects mobile devices to something nearby. The most common NFC tech is in payment systems, but look for this to be utilized in nearly everything that VeChain does. Gu Jianliang is certainly an overlooked, but hugely important person for VeChain.
Partnerships and Real World Applications
DNV GL
While the original goal of reducing counterfeit goods is still a large part of the business, the scope and focus of VeChain has expanded beyond that. Yes, you can still utilize the tech to see the source of your high-end wine bottles and to assure they are authentic. But, VeChain has taken a step beyond that. By partnering with DNV GL, a globally accredited quality assurance and risk management company, a wealth of knowledge is now made available in the maritime, oil, gas, energy, and business assurance sectors. A large focus of their partnership is in the food, agriculture, beverage, retail, and fashion industries. The CEO of DNV GL’s Business Assurance sector, Luca Crisciotti, has stated that in time this will come to include applications in the automotive and aerospace industries. DNV GL stated in a press release dated January 24th that, “By leveraging the Internet of Things and blockchain technology, we are reinventing the assurance process. Our Digital Assurance Concept will provide both companies and consumers with an unprecedented degree of insight into product and supplier information, to an extent and with an accuracy which have not been possible before.” DNV GL currently services 21% of a 23 trillion dollar market. Estimates suggest that this covers 50,000 plus customers over a wide range of sectors. Luca states that, “Everything we do will be supported by blockchain.” The huge untapped market potential just from this one company is enough to sustain price increases in VEN for years to come.
PricewaterhouseCoopers and DIG
Another major partnership is with PricewaterhouseCoopers (PwC). PwC is the 5th largest private company in the United States, the second largest professional service network in the world, and has been voted the most prestigious audit firm for seven consecutive years. PwC has a network of firms in 157 countries with over 800 offices that amounted to global revenues that exceeded $37 billion for year-end 2017. PwC’s clients cover every industry imaginable. From aerospace to wine imports. One real world application already supported by PwC and implemented on the VeChain platform is with Shanhai Waigaoqiao Directed Imported Goods Ltd. (DIG). DIG is a wine importer in China that accounts for over 30% of the high end wine imports for China. To ensure that the product they are selling comes directly from the source they are implementing VeChain’s technology into their system. Customers will be happy to know they are getting the real thing and it will drive more business towards DIG. Why would any respectable business person buy a non-VeChain authenticated bottle for their house party? And why would I buy a wine that is not sporting a VeChain enabled authenticator? Or go to a shop that does not allow it?
China Unicom Telecommunications Company
China Unicom is currently one of the largest mobile providers in China and is the fourth largest service provider by subscriber base in the world. China Unicom in 2017 had over $43 billion in revenue and is currently traded on the New York Stock Exchange as well as the Hong Kong Stock Exchange. Vechain’s role will be to develop and help with its BaaS (Blockchain as a Service) on the cloud using blockchain. Essentially, VeChain will provide Unicom with a BaaS to help China Unicom improve the efficiency of its supply chain management. As with the nature of business in China, China Unicom is part state owned which might provide Vechain with future state-run partnerships.
Kuehne and Nagel
Last year, VeChain partnered with one of the world's largest freight company Kuehne & Nagel (revenues exceeding $17 billion USD per year) to provide supply chain management services on the blockchain. Kuhne and Nagel accounted for nearly 15% of the world’s sea and freight by revenue in 2010 leading it ahead of DHL and Panalpina. They are the number one sea-freight forwarder, number two air-freight forwarder, and the number one global lead logistics provider in the world. Currently they have over 1,000 offices in over 100 countries and are looking to utilize VeChain technology in their systems.
NRCC – National Research Consulting Center of China
NRCC is the leading consulting company in China. It is stated that the, “NRCC serves as a China Enterprise Confederation Management Advisory Committee Executive Committee Member and a China Association for Certification and Accreditation Advisory Committee Member. They are also the first within China to have gone through the International Quality Management System Certification process.” They specialize in the development of domestic companies and organizations and currently serve more than 1000 long term enterprises clients servicing hundreds of Fortune Global 1000 companies extending from China through Europe and the United States. NRCC services a multitude of industries including, government administration, tobacco, automotive, oil/gas, financial services, construction, etc. Basically if there is a market within China there is a better chance than not that they might have their hand in it. Some of their customers include the Chinese National Tobacco Corporation, General Motors, Beijing Automotive Industry Holding Co, Fuyao Glass, Hisense Electronics, and so on and so forth. This research center is certainly a great gateway to a multitude of major corporations. It remains to be seen how many people will adopt VeChain’s technology within the NRCC sphere, but one is already confirmed.
Chinese National Tobacco Corporation
A surprisingly huge issue within China is counterfeit and low quality cigarettes. For this reason China selected VeChain to be its exclusive blockchain provider for the Chinese National Tobacco Corporation (CNTC). CNTC currently sells 30% of the worlds cigarettes while holding the title of being the world’s largest manufacturer of tobacco products by revenue. This is in part due to the fact that it runs a virtual monopoly on all tobacco distributed throughout China. VeChain will focus on proof of origin and anti-counterfeit tracking to be placed throughout CNTC’s supply chain. The announcement coincided with China’s announcement that they would be cracking down on smuggled counterfeit cigarettes. In the first half of 2017 alone, CNTC sold over $122 billion worth of cigarettes. That is only half a year! A full year would exceed over $240 billion in sales. In an excerpt from the VeChain announcement, CNTC will expect Vechain to:
“work with tobacco regulatory bodies and manufacturers to create specific blockchain+IoT solutions to collect end user data so that manufacturers can utilize the data collected to management internal supply chain more effectively and to develop products which are more fitting to end users’ likings. This disruption can increase transparency for regulators, save manufacturer costs, increase revenue, and eventually eliminate layers of distribution bottleneck.”
Future Partnership Speculation and Note
Many people have speculated on the future partners of VeChain. These range everywhere from Guggenheim Financial to the People’s Bank of China. Many of these partnership rumors have little backing behind them, so I want to remind people that they are just that, rumors!
Note: This is not an exhaustive list of the partnerships that VeChain has established. These are just some of the major partnerships. Other partnerships and alliances include Sentinel Chain (microfinancing), iTaotaoke (media), Renault Automobile Manufacturer, Internet of Things Alliance (IoT), and Edgechain (Mobile Edge Computing). This is still not an exhaustive list even after adding these five major names and groups!
Social Aspect of VeChain’s Application
An overlooked aspect of the RFID chips is the implications it could have on bridging the gap between end-user and the producer/distributor. Let’s stick with the bottle of wine example. In the past the producer of the wine, let’s say Opus One, had no contact with the person drinking the bottle. The bottle of Opus One was sold to the importer, put on a shelf, and sold to a high end wine drinker. And that was it. With this technology Opus One will be able to update the purchaser on news and how the juice in the bottle was created, as well as offer future deals. This is all possible through the VeChain application. Scanning the bottle of Opus One will give the Opus One Winery based in Napa Valley more access to their end-user in Shanghai. They can receive pictures, date of harvest, what the weather was like, growing season, etc. The broader implications that this has within the auto, agricultural, and especially retail industry is immense.
VeResearch and Michigan State University
Another big announcement from VeChain is a grant system called VeResearch that rewards research institutes with grants ranging from $50k to $1 million. VeChain currently states that they have four of the top major research institutes currently working to advance blockchain and IoT technology into the future. This will bring some of the great blockchain thinking minds to the university level to focus on advancing technology. It is a win-win-win in my opinion. Research is advanced, technology is cultivated, and it is all done on top of VeChain’s platform.
Currently the only participant VeChain has officially disclosed is Michigan State University (MSU). This in itself is another huge partnership. Currently MSU is the #1 supply chain management research institute in the world for six years running. They have already released EdgeChain utilizing VeChain’s Thor technology to make advancements in data marketplace opportunities. This advancement is dubbed Mobile Edge Computing (MEC). For more information on this partnership and technology please read the following article released by VeChain -
As well, Oxford University is known to be in talks with VeChain. Recently, during the rebranding on February 26th, VeChain released this news along with the article describing the relationship. Unfortunately, VeChain jumped the gun and the article and announcement were retracted. It is extremely likely they are still working with them, however business blunders must hold someone accountable, and for that they took the short end of the stick.
Clearly VeChain has had its hand in research and development for a longer time than anyone previously thought. This combined with the CTO’s patent know-how ensures that they will be on the forefront of technological development for blockchain and IoT technology for years to come.
Mainnet and Staking
Vechain’s mainnet launch is set to happen at some point in Q2 (June) 2018 and during this time VET holders can begin staking there VET in order to generate THOR, the byproduct that will be necessary to run the platform. At this point people will need to stake their VET in a wallet (to be released by VeChain) in order to earn THOR. This will have the bonus effect of locking large amounts of the circulating supply away, reducing volatility. Each VET will generate .00042 THOR a day, so holding more will earn more THOR. As well, VeChain has given certain holders more incentive for holding their VET. Listed next to the amount needed for holding is the estimated benefit of holding this amount in percentage increase of THOR generated per day compared to non-node holders.
The four levels of holders are:
- Qualified Strength Nodes (10,000 VET holding – 38.7% increase in THOR generated)
- Qualified Thunder Nodes (50,000 – 57%)
- Qualified Mjolnir Node (150,000 – 75.2%)
- Authority Nodes (250,000 – 75.2% plus 30% of all THOR consumed by transactions)
Each increasing level of node gives you more incentive for staking. As well the increased amount of THOR gives you less reason to sell of your current holdings. This essentially locks out a certain amount of the supply from the circulating supply. As well, moving up to the next level is certainly possible, so look for many people to be selling off their THOR in order to purchase more VET to get to the next level.
Current estimates, pulled from Vechain’s Apothesis Part II roadmap, are that the following amount of each node are currently locked away waiting for the generation of THOR power to begin. The authority nodes are capped at 101, so that can’t be increased. Here are current estimates:
• 101 Authority Nodes on chain, at 250,000 VET per node (fixed quantity)
• 667 Mjolnir Nodes on chain, at 150,000 VET per node
• 1600 Thunder Nodes on chain, at 50,000 VET per node
• 5000 Strength Nodes on chain, at 10,000 VET per node
This results in a combined total of 255,300,000 tokens removed from actual circulation, bringing the total supply down to 240,374,734. This does not take into account the fact that people may have anywhere between 10,000 and 49,999 for a strength node or more than 250,000 for an authority node. Likely not everyone who has a Strength Node just has 10,000. More than likely many of these people are actively attempting to get to the next level, so circulating amount may not necessarily be indicative of the actual available amount for trade. This means less people will be willing to sell, which drives price upwards for the remaining VET.
Summary
Overall, I rate VeChain as a strong hold. No longer will scam coins run rampant. Companies with the foresight of VeChain’s will hopefully succeed, while many with no future use case or real world application will falter. VeChain is positioning themselves as the former with great partnerships, investors, regulations, social outreach, and networking. Slow short term growth will likely scare off many investors, however this will be an extremely strong long hold. Look for this to appreciate immensely in value over the next 5-10 years.
I must note that I am a current VEN/VET holder and am not an employee of the VeChain Foundation or any of its affiliates. Thank you for reading!