Hi everyone, I decided to write a medium article about my next serie because a twitter thread is not going to cut what I’m about to explain to you. I took the time to study the VeChain whitepaper to get a holistic view of the foundation. I’m writing this article to share my key takings and the things I learned from the 114 pages long paper.

I want to thank @cryptostevee for his stunning graphics.

Which problem are we tackling here?

Through the history of technological development, the first 100 years concerned the technology of physical flows like transportation. The past 30–40 years advanced information flows over the Internet. Now, blockchain is considered and recognized as a technology improving value flows by solving the trust problem. VeChain foresees use cases and applications built on blockchain in the very near future influencing our daily lives, just like the Internet of the present. Blockchain technology can establish a new trust-free sharing business collaboration model. VeChainThor humbly stands on the previous discoveries of Ethereum (Blockchain 2.0) and Bitcoin (Blockchain 1.0). VeThor will be Blockchain 3.0, 4.0, 5.0, etc. For this reason, VeChain refers to VeThor not as Blockchain 3.0, but as Blockchain X. The technology puts data ownership and monetization in the hands of the people who generate that data.

“You pay the right for what you get and earn the right for what you share.” Renato Grottola, SVP Global Director M&A and Digital Transformation, DNV GL.

Governance model

Idealized decentralization is Utopia, even to the crypto and blockchain world. Bitcoin & Ethereum became more centralized through large wallets holding significant portions of tokens. VeChain believes in the balance of decentralization and centralization on which VeChainThor platform’s governance is designed. The central foundation makes sure that large ‘stakeholders’ are enterprise users who will make extensive use of the ecosystem in the future. In this way the central foundation guarantees the long-term development of the platform, business expansion and VET value enhancement combined with decentralised ownership of data.

Economic model

Almost every existing public blockchain directly or indirectly links the transaction costs to the total valuation of the respective blockchain, resulting in high transaction costs. There exists a paradox: the greater the use of a blockchain, the higher the value of tokens, but additionally the higher the cost to use that blockchain, which discourages use and lowers total network value. No business owners would accept running applications at an unstable cost. Token holders want the value of a token to increase, and enterprise users want it to be stable and/or low. VeChain introduced a proper economic model with a twin-token system in order to resolve these conflicts.

Two levels of VeChain blockchains

VeChain Token ($VET) is the “Smart Money” to carry on value transferring along with commercial activities running on the VeThor Blockchain.The VeChain Foundation will continuously and progressively distribute $VET Tokens to the community through various activities in the coming years.

VeThor ($VTHO) is the energy or the cost of carrying on the payment transactions and smart contract transactions. VeThor is generated from VeChain Tokens over time.

So, $VTHO is generated via holding VeChain Tokens (VET) which allows you to make use of the VeThor Ecosystem at no extra cost if the user holds the tokens for long enough.”

$VTHO Price

I get this question very often: what is a reasonable target price of $VTHO in the (near) future? Before I dive into this I want to remind you on the following rule of thumb: The value of a token is determined by the usage (demand) given a certain supply. Based on the VTHO generation model, VeChain can estimate the supply and demand of VTHO for each day and dynamically for one year after the mainnet launch. The total supply of VTHO is calculated to be 37,459,858 each day with the current generation rate. The demand of VTHO included smart contracts deployed on the VeThor blockchain by enterprise users and individual transaction payments. As long as the scope of this demand is unknown it is not possible to give a trustworthy prediction of the VTHO value. However, VeChain is able to stabilize the VTHO price and maintain the equilibrium of demand & supply by altering generation and burn rates. I dare to give you my personal prediction:

Given the need for an active community with holders and low transaction costs, VeChain will use it’s control on the VTHO supply & price to make sure that holders will be sufficiently rewarded at an optimal efficient price.

Why do I need $VET?

If the smart contract transactions are payed with $VTHO, why should I buy $VET? Good question, there are three reasons:

$VET generates $VTHO. Future appreciation of the $VET price. $VET tokens are used as smart money.

VeChain believes that the $VET price will & should be decided by the market based on the fundamental understanding that VTHO will be serving as the cost to use VeChainThor Blockchain which is expected to be stable, controllable and predictable to support applications running on the platform.

Multi-task mechanism

This built-in feature of the VeThor blockchain allows a single transaction to carry out multiple tasks (defined as “Clauses”). This mechanism offers power and flexibility to deal with complex situations in real applications. For instance, it can provide simple & systematic solutions to fund distributions, mass product registration, or any other operations that require the execution of multiple tasks as a whole.

Participants in the VeChainThor Ecosystem

All these partnerships, how can we classify them? There are several types of participants who make use of the VeThor Blockchain X:

Business owners

Enterprises/individuals/organizations/governments/regulators who run applications on the VeThor Blockchain to provide products and services. (e.g. BMW, Renault, Bright Foods, D.I.G, Government of Gui’an etc.) Application Service Providers

Help business owners building the blockchain applications (e.g. Esprezzo). Smart Contract Providers

Enterprises/individuals who provide technical services to build & run smart contracts for business owners. (A lot of business owners/partners are co-developing smart contract solutions, like iTaotaoke for example). Infrastructure Service Providers

Enterprises/individuals maintaining and running full nodes to generate and verify blocks (e.g. DNV GL, PwC). VeChain Foundation

The centralized organization to carry on daily operations for developing and maintaining the VeChainThor blockchain ecosystem. VeChain Community

All entities who are willing to participate and contriubte to the development of the VeThor ecosystem, rewarded accordingly, and categorized by their level of token holdings.

Overview of all participants and partners in the VeChain Ecosystem

Masternodes

I won’t dive into the full (X) Node program of VeChain, you can find this information here. I found however one interesting fact: Nodes are rewarded a portion of VTHO generated by a pool of VET set aside by the foundation. For X-Nodes there is an additional pool of VET set aside for early supporters. Given the fact that the number of X-nodes can only decrease in the future, these X-nodes rewards will relatively increase over time.

Dealing with the complexity of blockchain transactions

One of the major obstacles for ordinary people, or even enterprises, to adopt a public blockchain is the uncertainty and complexity in dealing with cryptoassets. On the one hand, users have to face the high price volatility when obtaining cryptocurrency from the market; on the other hand, they need to understand related concepts and get familiar with various tools to be able to use and manage their cryptocurrency. So, is there a way for us to find a way around these problems? For the existing Blockchain networks such as Bitcoin and Ethereum, the answer is negative. In the VeChainThor Blockchain, we recognize this critical problem and come up with a novel multi-layer payment model. This model makes it possible to use applications on the blockchain just like people are used to nowadays with non-decentralized apps. User don’t need any knowledge related to cryptocurrencies.

“I wanted to firmly express that in three years, the public will be using VeChain every day and never even know it.” Sunny Lu, Co-Founder & CEO VeChain

VeChain ID (VeVID)

The VeVID application has a key functionality in the ecosystem. The VeThor blockchain uses a tailor-made smart contract which authorizes digital ownership of product/service. The ownership is linked to a VeChain ID with a public & private key for each instance. VeVID verifies the identity behind an address and assures that the executed transactions with data are your property. A privacy protocol will ensure the privacy of sensitive data.

Verification of data ownership with VeChain ID’s

Internet of Things & Blockchain

IoT can be described as “A network containing ‘smart devices’ with some sort of sensing mechanism that can communicate via the internet with other devices or the cloud, without human interaction.”. The development of IoT will result in widespread adoption, the International Data Corporation projects 45 billion IoT devices world-wide by 2020.

Blockchain can be a very functional tool to facilitate the connection between these sensors on smart devices:

Record, track & validate the log history of devices. Digital identification and ownership of devices. The authenticity, privacy & security of devices. Smart activities between human & machine or machine & machine.

VeChain believes that IoT and Blockchain technology are born to be working together. IoT is the technology to build up informational and even commercial connections between devices. IoT is one of key technical capabilities of VeChain team. VeChain’s technical portfolios include adedicated IoT team focus on the IoT development and collaborative solutions with Blockchain

I want to conclude this article with the friendly reminder that VeChain is about to complete their Technical Roadmap, these guys are ready to disrupt. In the last part of the whitepaper they individually describe all their use cases and applications. I will dive into these in a second post. Stay tuned.

Have you seen?

Thanks for reading!

Rik

Twitter: @RikRapmund

E-mail: Rik@WorkEx.io