1 Level
17 Review
19 Karma
Review on VeChain by Celil Ozturk
Based on various videos, fan-made whitepapers and market reports — we can…
Based on various videos, fan-made whitepapers and market reports — we can presume that VeChain will use RFID tags, QR Codes and NFC chipsets to digitize assets which can then be managed through a cloud platform. By using blockchain the data gathered from digital assets becomes trustless and tamperproof, enabling valuable information to be shared between manufacturers, suppliers, transporters and customers.
However, the methodology of this is unclear because VeChain have failed to release a whitepaper. This leaves the general public in the dark regarding how blockchain is actually utilised. There are many issues faced when creating a blockchain-based supply chain which need to be discussed:
1) Interoperability
Blockchain may allow the safe exchange of data, but it does not solve the issue of interoperability. How the different systems spread across parties can translate information effectively between eachother is easier said than done. The software being used by manufacturers, suppliers, transportation services & consumers is guaranteed to be different. If all these programs can’t speak to eachother there is little value to VeChain.
2) Transaction Costs
It is still unclear what the price of using the protocol shall be. VeChain in a recent announcement stated “The VeChain Foundation… will closely monitor the usage and status of the VeChain Thor blockchain and to balance the VeChain ecosystem.”[Source]
This is beneficial for businesses using VeChain as the cost of using the protocol should be relatively stable. As an investor this is a huge red flag. This effectively gives them the ability to manipulate the price of their own currency by adjusting the rate of THOR production, the same power as the federal reserve.
3) Offline Solutions
Many blockchains can only work while connected to the internet. For the supply chain to be constantly connected it would require an international mobile data connection. Who will pay for this between the multiple parties has not yet been disclosed or explained.
4) Scalability
This is one of the key problems all blockchains are facing at the moment. In a recent AMA Sunny explained;
“The capabilities of our blockchain can achieve up to 10,000 tps. However, when we launch it, we will keep the speed at 50 tps and this will eventually be upgraded when our ecosystem grows with more users and there is more demand from applications.”[Source]
With no description of how they intend on reaching 10,000tps or any reasoning for limiting the chain speeds to 50tps, this seems to be a case of just taking the companies word for it.
VeChain 3.0, is currently running on a private testnet, with their website claiming the public chain will launch in Q2 2018 followed by the client mainnet launch in Q4 2018[6]. This means there is no way for users to test the platform, for hackers to audit the blockchain or for businesses to accurately budget the costs of digitising the supply chain.
Considering the current marketcap, the age of the project and the obvious issues which could arise it is inexcusable to not have a detailed whitepaper explaining the technical details or methodology to meet their bold claims.
The lack of functionality seems to be completely understated by the investment community. There are imperative issues of a blockchain-based supply chain which have not been addressed by VeChain. This is not to say they have not thought of solutions to these issues, but rather, the investor must be aware they are putting their faith and money into a product which is still in the alpha stage of development.
Pros
- Vechain, using blockchain technology, aims to tackle the growing issue of fake products by revolutionizing the supply chain. The digital identification of assets on the blockchain will enable transparent production lines, symmetrical databases, asset traceability and authenticity of goods.
Cons
- VeChain’s ambition is to develop a decentralised business ecosystem, which enables the flow of information securely and privately, building trust and transparency across borders and companies.
