When goods are counterfeited, it affects the prestige of a brand, company profits are reduced and customer purchases influenced. That’s why we created this VeChain Review and price guide.
The increasing issue of fake products is what Vechain seeks to tackle with the use of blockchain technology by revolutionizing the supply chain. The assets digital identification on the blockchain will allow transparent production line, asset traceability, symmetrical databases and authenticity of goods.
The aim of this report is to critically and accurately discuss the value embedded in cryptocurrency, Vechain, in an impartial manner such that multiple factors are considered to empower businesses and investors to make better financial decisions.
Disclosure: I hold no VEN. I have a personal policy of not holding any position regarding coins I pick for review.
Price manipulation is not the goal of these reviews but to offer new investors a sense of direction.
As at 7th of January 2018, the information contained in this document becomes valid.
The methodology of these calculations will be disclosed later on.
A nice summary of Vechain’s vision and functions is in the following statement.
Vechain review has an ambition of developing a business ecosystem that is decentralized which allows secure and accurate information flow, creating transparency and trust over borders and countries. A community is also active.
Vechain leverages blockchain by as a solution to the problem of counterfeit and traceability of products across supply chains and logistics specifically in agriculture, wines, transportation, logistics, luxury goods, pharmaceuticals, automobile and audit services.
This vision is a very ambitious one and if it is achieved, it will witness the use of Vechain in a lot of product-based verticals.
Considering various videos, market reports, and fan-based white paper- we can assume that RFID tag, NFC chipsets and QR codes will be used by Vechain to digitize assets which will have the experience ability to get managed via a cloud platform.
The gathered data from digital assets turns tamperproof and trust less when blockchain is used, this allows the sharing of valuable information between suppliers, manufacturers, transporters, and customers.
Nevertheless, the failure of Vechain to release a white paper has rendered this methodology unclear, in this vechain review (VEN). The general public is left in darkness as regards how the actual utilization of blockchain. There is need to discuss the various issues encountered when a blockchain based supply chain is being created:
The issue of Interoperability is not solved despite that blockchain technology allows a safe exchange of data. It is easier said than done the process of different systems spreading across parties and how they can transform information between each other in an effective manner. It is guaranteed that the used software by suppliers, manufacturers, customers and transportations system is different. Vechain has a little value if speaking to each other cannot occur with these programmes.
2. Transaction costs
What the price of using the protocol will be is still unclear. Recently in an announcement, Vechain stated that its foundation will monitor, on a close range, the Vechain Thor blockchain’s usage, and status and also see to balancing of the Vechain ecosystem.
The protocol cost of use is expected to be somewhat stable as a benefit for businesses utilizing Vechain. This is a big red flag for investors. Just as the power of federal reserve, they have the power to adjust production rate of THOR as they have the capacity to manipulate their own currency price.
3. Offline solutions
Internet connection is a requirement for many blockchains to work. International mobile data connection is required for constant connection of the supply chain. An explanation as to who will be responsible for the payment between the multiple parties is still awaited.
All blockchains have this as a key challenge. AMA sunny recently explained that up 10,000tps can be achieved by the capabilities of their blockchain. The speed is to be kept at 50tps when launched which will see an upgrade when their ecosystem grows with increased users and increased demands from applications.
There are no descriptions on how they plan to reach 10,000tps or why chain limit is to be reduced to 50tps. This case is just going to be like taking the company’s word has it has been said.
Currently, Vechain review 3.0 is running on a private Testnet. Public chain launch will occur in Q2 2018, as claimed by their website, and also a launch of client Mainnet in Q4 2018. Meaning derived from this is there is no testing the platform in any way by users, for auditing of the blockchain by hackers or for businesses to have an accurate budget of the supply chain digitization cost.
With the current market cap as a consideration, having a white paper explanation on the methodology to meet their claims or technical details should not be denied with the excuse of the project age and obvious issues possible to arise.
The investment community has seemed to totally understate the lack of functionality. There are still some essential blockchain based supply chain issues that Vechain is yet to address. This is not to claim that solutions to these issues have not been thought about, rather, investors need to know they are investing in a product that has not passed the alpha stage of development.
Vechain Review Coin analysis (VEN/VET)
VEN is the only token Vechain has on the market. It is to be transformed on Vechain platform from an ERC-20 to VET token at ratio 1:1 around Q2 2018.
According to Vechain, there are two use cases for core token VET.
The store of value of the exchange medium that will serve as smart payment currency.
Dividend-esque system THOR production.
Medium of exchange
For many ICO’s, Sio, Golem and Ethereum inclusive, the ecosystem use of a platform specific currency has turned out to be the standard model. Naturally, the price rises with the increment of circulation speed and the demand for the coin. However, the true practicality of a native cryptocurrency should be questioned.
Most times in crypto, the quantity of discount a token is expected to see is often approximated by real-world revenue figures. On their website, Vechain do this themselves: indicating that in 2016, 60 billion USD was spent by liquor market. However, what I strongly doubt is that there will be any demand for the liquor market coin or any market penetration.
VeChain Review’s (VEN) Reasons for:
To cut transaction costs and time, a borderless currency is useful since supply chains are most of the time extended across countries (however for the same purpose, any other crypto can be put to use).
Using Vechain review, implementation of this side by side other supply chain software could assist with automated price calculators, billing, and product inquiries.
Vechain is able to accept payments by fiat and this is because it is a legal entity i.e Vechain. Shanghai Wellian Information Tech. Co. Ltd. (Source).
The standard form of payment for the industry is Ethereum. Vechain current Financial Executive Report shows that they pay expenses with Ethereum (source). Why would anyone else use their currency if the core company isn’t?
It is a poor store value due to the volatility of the VEN.
The currency is easily manipulated due to the exceptional wealth distribution.
As being cryptographically secure, VEN is yet to be proven or tested for this.
No fiat exchanges. (Bitocean, an ATM company is what Vechain is working with)
Tax and regulation issues.
A conclusion can be made, with the against reasoning, that VEN Vechain price is currently not valid as a store of value nor medium of exchange.
Produce THOR power
When Mainnet is launched, transaction fees are paid with THOR power. Holding VET in a wallet is a way to passively earn it. As a strong move to hold Vechain, Individual investors looking to earn profits off dividends, Institutions hoping to have a control on their operating costs is the ability to produce THOR.
Only those with a good VET sum will have the ability to earn Thor at a swift rate. This was announced by Vechain as a tier based system. This goes against cryptocurrency egalitarian spirit.
Thor power was introduced to unlink VET value and the network cost of use.
(NEO GAS CORRELATION =0.55)
NEO also utilizes a similar two coin system, which produces gas when held in a wallet. Even with the Vechains claim of THOR power, through NEO, we see a high correlation in assets.
Vechain proposes to stabilize the price by adjusting Thor rate. This is expected to reduce correlation and allow the use of a network by those highly invested to facilitate the cost. This gives room to manipulate Thor and VET prices.
Valuation of THOR power
Etherscan says there is presently 873M VEN (1.000M-127M).
0.00042 thor power is produced by every VET daily. Supply > 366,819.
Price of THOR can be estimated when this is compared with Ethereum cost of the daily transaction.
15tps to 50tps as Ethereum adjusted capacity, that is 4,320,000 transactions daily.
Assumption: Ethereum network total cost equals Vechain ($3.9M daily).
Our finding is that $0.895(3.9/4.32) is the cost of each transaction.
Relative Ethereum cost is equal to current max transaction capacity multiplied by new transaction fees.
Conclusion: If the same transaction demand is faced by the network, just as Ethereum,$0.895 will be the average transaction fee while $3.03 will be Thor price.
Note: This Thor market value could be exaggerated because: