A couple weeks back, I promised to share some potential “sleeping beauty” cryptocurrencies.
First, as you probably know, the cryptocurrency market on the whole is getting slammed.
Bitcoin is back to what it was about three months ago (for perspective).
And certain countries are throwing around the “b” world — no, not bubble… ban.
It’s not quite yet the “Nuclear Winter” Perry Marshall and James Altucher predicted, but if it keeps on this trajectory, it could be. And all the “vaporware” scams (which Altucher estimates about 95% of the market) will be wiped out.
Meaning, the companies with a legitimate innovations, partnerships and direction are getting slammed too.
The blood has hit the streets.
If you’re an investor, it’s not a bad time to develop a strategy for screening good cryptocurrencies from the scams while they’re down. (And to listen to people who already have good screening strategies.)
In crypto, as a rule of thumb, you should
A] never invest more than you can afford to lose and
B] always understand what it is you’re buying into…
To understand, at least on a superficial level, what you’re looking at, there are several strategies. An interesting one is the SPACESUIT-X strategy, developed by Bruce Fenton.
With it, you observe the Security, Participation, Accounting, Community, Earnings, Supply & Demand, Usability, Industry-Backing, Technical and X-Factor. (SPACESUIT-X.)
With a massive amount of help from researcher Josh Grasmick, using this strategy, we were able to pick apart VeChain from the bottom up in only a couple hours.
It’s certainly not perfect — but good enough for a broad view of VeChain.
Below is what we discovered.
(Full disclosure: Although I’m invested, this isn’t a recommendation to buy, merely a good example of a currency I found using the incredibly meticulous SPACESUITX screening tool. As always, your own due diligence is recommended.)
The name is VeChain.
The elevator pitch: They want to build a “trustless,” transparent ecosystem for supply chains.
In short, supply chains the world over are incredibly complex and opaque. This has allowed for a thriving counterfeiting market to take advantage and causes hundreds of billions of dollars in losses.
One of VeChain’s first tasks at hand is to help disrupt the incredibly vast counterfeiting market in China by tracking products through the supply chain.
And, they haven’t just gotten the “green light” from the blockchain-wary Chinese government, they’ve already formed a partnership. Not only that, they’ve created partnerships with several high-end industries (luxury goods, tobacco and wine, for example) where supply chain and counterfeiting are massive headaches.
In their words, the VeChain team is “building a trust-free and distributed business ecosystem to enable transparent information flow, efficient collaboration, and high speed value transferring.
“VeChain,” the VeChain foundation writes, “the world’s leading blockchain-enabled product management platform, revolutionizes how products travel through the supply chain. Using blockchain technology, VeChain makes it simple and secure for product manufacturers to collect, manage and share important product data with vendors and consumers throughout the lifecycle of a product.”
Let’s begin with Security…
As it stands, VeChain operates on the Ethereum blockchain.
This, to be honest, almost turned me away.
With all of VeChain’s massive partnerships, public and private (some of which may surprise you, I’ll reveal all of them in a moment), it shouldn’t be dependent upon not only its tech working, but also whatever the Ethereum network does.
Which is why I was glad to see that next month VeChain will migrate to its own platform. This will happen as part of its rebranding strategy on Feb. 26.
Meaning, they’ll have full control over the security engineering of their own product. Security-wise, this will put them miles ahead of copycoins that create their coins on experimental chains (like Ethereum’s) and expect it to be safe.
The security model will be distributed out to all participants through nodes and “masternodes” (which enforce the rules of the protocol and keep all other participants honest), protected by industry-standard encryption.
Anyone who has more than 10,000 VET (the VeChain token) can run a masternode, which offers more rewards than holding less than 10,000. Masternodes also get voting rights on any additions to the network. There are higher masternodes which offer higher rewards from there, but we’ll keep it at that.
Nodes on the VeChain network can provide specific services, meaning the work is distributed out to the participants in return for rewards.
As the team explains…
“Enterprises and organizations that directly participate in the Blockchain network and maintain a certain number of nodes to protect the overall network security. Maintaining a specific function node to provide related services, such as customs, quality inspection node, audit node, wallet service, and user private key management service provider.”
Similar to Ethereum, a VeChain token gives the holder the right to occupy and use the blockchain and its resources.
Except there’s a difference…
Holders of VeChain (VET) also receive what’s called THOR power — a reward for participating in the network. While VET acts as a medium of exchange between participants, THOR acts as the “gas” to run your own contracts and implement your own applications.
Think of THOR as dividends, rewarded to holders of the “stock.” (Not a perfect analogy, but good enough.) All THOR is “burned” or consumed by the network when it’s used, meaning it adapts to the supply and demand of the network without artificially inflating/deflating the core medium of exchange, VET.
THOR “gas” is independent to the price of VET, so if VET rises in value (or drops), the network still runs as it’s intended, independent of any volatility.
The VeChain team is working with, in their words, a “world-famous accounting firm” called PricewaterhouseCoopers (PwC) (which pulls in $37 billion in revenue annually) to develop an application so anyone can audit the blockchain. This means businesses and consumers alike will be able to track the supply chain to ensure they’re buying exactly what they intend.
There are a total of 1 billion VET. The allocation plan can be found in this document.
41% public investors
9% private investors
23% enterprise investors
22% business development & operations.
Although VeChain is still largely unknown in the Western cryptocurrency markets (it’s only traded on Asian-based exchanges at the moment, which is a plus), it has a thriving community.
Reddit communities are a pretty good indicator of the amount of interest, and VeChain is the fifth fastest growing community on the platform.
More importantly, VeChain has just brought Sunny Lu on board, former CIO of Louis Vuitton China. And Kevin Feng as COO. Both bring a lot of valuable industry connections and experience to the table.
This is on top of a huge pile of partnerships already established, which we’ll cover below.
Also, Jim Breyer, of Breyer Capital, has recently hopped aboard, too. A quick glance of Breyer Capital’s portfolio shows they only have three investments in the cryptocurrency space.
VeChain is one of them.
(And, as an aside, here he is right next to President Xi.)
VeChain’s success, along with all cryptocurrencies, depends on what problems it’s trying to solve. As far as supply chain goes, the problems are vast and far-reaching.
According to the consultative arm of the EU, the European Economic and Social Committee (CESE), counterfeit goods cost the EU an estimated 800,000 jobs each year.
Worldwide, according to the UN, the worth of counterfeit goods run up to $1 trillion. And, in the EU alone, according to the Organisation for Economic Co-operation and Development (OECD), “an estimated 5% of all the goods it imports — totalling about $100 billion per year — are counterfeit.”
Furthermore, in China, counterfeiting is a massive health problem.
Consumers and businesses want to know their products are coming from reputable people — and that they aren’t getting walnuts filled with concrete, fake beef, toxic counterfeit baby formula, industrial salt sold as table salt, fake ginseng or plastic rice.
The Alt Health Works blog explains one uncomfortably common scam:
“Some Chinese websites have come out with instructional videos on how to make $70 a day by producing and selling fake eggs. The chemicals that are required are “Alginic Acid, Potassium Alum, Gelatin, Calcium Chloride, water and artificial color.” The eggshells are made from Calcium Carbonate. Eating these eggs may cause memory-loss and dementia.”
And this is just counterfeiting, and not accounting for the value lost in simple inefficiencies in the supply chain.
Inefficiencies in the perishable food supply chain alone, for example, according to a study published in the International Journal of Scientific & Engineering Research, cause a mind-bending 20 to 60 percent of food loss in transit, costing over $750 billion a year.
With growing complexities in the global supply chain, this is a problem across the board. And one begging for a solution.
One which VeChain is actively developing.
Vechain tokens have a hard limit of 1 billion tokens.
During the ICO, they burned 131 million (meaning, they “locked” those coins they held into the network, never to be recovered).
There’s a circulating supply of 869 million and of that, roughly 300 million are locked up in enterprise investors and the non-profit foundation in Singapore.
The node/masternode strategy could keep the majority of these tokens out of circulation. Meaning, the supply for speculation will likely be much more limited than other coins.
Participants in the network (holders of VET), as discussed, can use the network, with the help of RFID and NFC chips, to track goods through the supply chain. Just by simply scanning a barcode on your phone.
If you’re an avid organic food eater, for example, you’ll want to know your food is coming from an ACTUAL organic farm. The same can be said for all products. Especially luxury goods.
The ability to track goods to the source will allow for a more efficient supply chain and for consumers to know that they’re getting exactly what they’re paying for.
“A product on the VeChain platform is assigned a unique ID, which is stored simultaneously in the blockchain, and placed on the product with an NFC chip, RFID tag or QR code. At any point during the product’s life, the chip, tag or code can be interacted with, whether it’s a distribution or retail partner ascertaining batch membership, or a consumer learning more about a product’s provenance. The company envisages a broad range of applications, including brand protection, anti-counterfeit, and food safety.”
And as for current use-cases…
“In just two years, VeChain have already worked with a number of clients across various consumer product industries, including wine importing where Direct Imported Goods (DIG), China’s largest importer of fine wines, have placed one million bottles of wine on VeChain’s platform to counteract the huge issue of fake wine in the country, through to fashion and luxury accessories, food production and automotive supply chain management with Renault. The company has a number of partnership announcements in the pipeline.”
As far as announcements go, VeChain has cemented the following partnerships:
China Unicom – (Chinese Language)
MadeForGoods – (Chinese Language)
Jiangsu Printed Electronics Co., Ltd
A Global Convenience Store Franchise
Xiamen Innov Information Technology Co Ltd
Healthcare Co. Ltd
Hubei Sanxin Cultural Media Ltd.
The list of heavy-hitter team members can be found at this link.
Just one partnership, DNV GL, services over 80,000 customers worldwide, including Alibaba, Oracle, Coca Cola, IBM, HSBC, Tencent and Cisco.
“DNV GL,” the VeChain foundation writes on its Medium page, “being the most trusted and professional entity for assurance, creates a global standard for the internal processes of large enterprises in terms of production procedures, production safety procedures, and quality assurance methods. A full list of DNV GL classifications and certifications can be found here. (https://rules.dnvgl.com/servicedocuments/dnv) Due to their global presence in assurance and certification standards, DNV GL’s network of companies extends over 80,000 worldwide.”
China’s been a notorious back-and-forther when it comes to the cryptocurrency space.
But one area it wants to crack down more than blockchain is counterfeiting — and this is where China sees potential. Which is why they are giving VeChain the “green light” and partnering up.
“VeChain,” says the Foundation, “will be providing proof of origin and anti-counterfeit technology to track Chinese produced tobacco products throughout the entire supply chain. This partnership came into place as China announced a crackdown on smuggled counterfeit cigarettes.”
Without going too deep into the weeds, or rehashing what we’ve already covered, VeChain already has proof-of-concept with its aforementioned wine tracking project. It has a masternode/incentive model comparable to Dash (which has seen explosive growth since inception).
And, the chain has been shown to support up to 10,000 transactions per second — comparable to Visa.
Although VeChain does have competition in the space with WaltonChain (WTC), it has incredible first-mover advantage with its massive list of partnerships.
This all adds up to why I think VeChain could be a solid player in the crypto space.
And one to keep an eye on.
[Ed. note: For more “sleeping beauties,” check out James Altucher’s “Crypto Code.” With it, he’ll show you how he made $1.8 million on just one tiny cryptocurrency. Read on.]
Managing editor, Laissez Faire Today