Whilst the U.S. Senate (with the exception of Senator Mark Warner) demonstrates a staggering lack of understanding of Blockchain fundamentals, China is poised to be the first country to roll out large scale adoption of the technology with a new Blockchain Smart-City in Gui’an, China’s Western Guizhou Province.
There are whole baskets of breadcrumbs and signals indicating how VeChain (VEN) and the Thor Blockchain will be the infrastructure on which cities of the future will run, starting with the Gui’an Smart City.
To the casual observer it might appear as though China is not in favour of cryptocurrencies, with ICO’s being banned in September 2017 and cryptocurrency exchanges shut down shortly afterwards. This is hardly surprising when cryptos are often touted in mainstream media as being the exclusive domain of drug dealers, assassins, and money launderers.
However, depending on how the architecture of the blockchain network is structured, it can be set up in such a way that reaps the benefits of blockchain technology whilst integrating government oversight.
In the case of VeChain, the implementation will be truly revolutionary:
At its core the VeChain Foundation does not believe in a fully anarchically decentralization, nor does it believe in totalitarian governance. It is for that reason the board members envisioned something in between. Our governance structure is a new breed of a decentralized system through centralized channels.
The above extract is taken from VeChain’s announcement about the VeChain apotheosis re-branding to VeChain Thor, which translates to ‘the glorification of something to a divine level’.
VeChain, once upgraded to the VeChain Thor Blockchain (VET) will operate in a similar way to Ethereum, acting as a network/blockchain upon which other applications can be built. Unlike Ethereum, which is left to developers and companies to think of blockchain uses and develop their own token, VeChain has a long list of BIG partners that it has been working with to develop applications. Whilst VEN is currently an ERC20 token and runs on the Ethereum network, and will continue to do so when converted into VET at the end of February, it is unlikely to remain on the Ethereum network — for reasons I will discuss in Part 2 — once the mainnet launch takes place in June.
The core message is that legitimate and near-term business applications, rather than speculation and hype about potential future uses, are the most fertile ground for execution of Blockchain technology.
From cursory research on how VeChain plans to operate, it might appear as though they will merely be making use of the Blockchain to improve transparency in logistics. This alone would make a strong use case, with the fakes industry estimated to be worth close to half a trillion dollars per year and incidents such as the baby infant formula scandal, in which 6 babies died and 300,000 were ill, highlighting the need for greater control of the supply chain.
Along with the logistics applications, VeChain has multiple partnerships with the State Council of the People’s Republic of China. In case you are hard of thinking, that means the Chinese Central Government.
What signals are being sent when China bans ICO’s and Crypto exchanges and then shortly afterwards mandates a small selection of homegrown teams be government partners? Considering the fate of Facebook, Youtube, Google, Twitter, Amazon and Uber in China, this is hardly surprising.
Gui’an New Area in Western Guizhou province has been given the status of special economic development zone, with the intention of turning it into the National Data Center of western China, focusing on Big Data, Blockchain, Cloud Computing, and Smart Solutions.
In case the clear government endorsement (above) on Twitter by the state media wasn’t a big enough clue, VeChain released the following press statement in December 2017:
VeChain is mandated to be the blockchain technology partner of the government of Gui’an to plan, design and implement such processes.
Below is an overview of the processes alluded to above:
· Providing a blockchain based information system to collect and analyze administrative data and cut red tape.
· Offer privacy protection of data and store business registration related documents.
· Allow for remote business registration and robust auditing.
The potential value in terms of reduced time wasted through centralized bureaucracy is immense. Add to this the ability to instantly account for every penny spent on public projects and tax owed (if all payments are made through the network) and the benefits are abundantly clear. Given that cash payments are becoming increasingly obsolete in China, with mobile payment applications such as WeChat pay and Alipay ubiquitous, implementing blockchain for tax auditing will save the government billions in lost revenue.
Vechain already has a working product through its connection with DIG (Shanghai Waigaoqiao Direct Imported Goods sales Centre Ltd.), also a government owned entity, using their NFC chip (a smart chip that is attached at sources and tracks data on whether the product is authentic, location, temperature, ownership etc.) to enable full and immutable traceability from source.
DIG currently account for 30% of all wine imported into China, which would mean that a forecasted 1.2 billion 70cl bottles of wine will be authenticated using these chips connected to the VeChain Thor network.
VeChain not only intends to use this partnership and technology to power the first ever blockchain liquor exchange, they also plan to use VeChain to power future exchanges around the world, where physical assets will combined with digital assets.
VeChain, along with the Liaoning Academy of Agricultural Sciences (also a government entity), has developed a cloud platform for intelligent agriculture.
The overview of this project on the VeChain Medium page is far more detailed than I could hope to give here.
I would recommend taking the time to read the 8 page press release outlining what VeChain will be doing in Gui’an.
If you are unsure of just how serious the Government of China are about implementing blockchain technology, the following extract from the release seems pretty conclusive:
When the technology and implementation process streamlines are well tested, it is expected that this process will be rolled out throughout the entire region of China.
In logistics VEChain has partnered with DNV GL, a quality assurance and risk management company, and Kuehne & Nagel, the worlds largest freight company. A recent article in the American Journal of Transportation gave details of how the application of blockchain technology to logistics can help companies boost the transparency and traceability of their products from the factory to the consumer. Data from sensors can be recorded to the blockchain, guaranteeing accurate and immediate information on source of origin, temperature levels (for frozen food), and whether the product is an original or fake.
I could run on for another 2,000 words detailing the plethora of partnerships. Not to mention their development team, which is nearly as impressive as the number and strength of partnerships — an overview of the team can be found here. However, as the point of this article was to demonstrate beyond a shadow of a doubt the scale of VeChain’s future operations and use cases, links with the relevant details will suffice.
Yes, a lot of these are Twitter announcements. Yes, it’s lazy to copy and paste from Twitter. But, I would like to finish Part 1 of this series and move on to Part 2, which will discuss VeChain Thor/mainnet implementation and likely market cap moving into 2018 and beyond.
Pricewaterhouse Coopers (PwC):
Breyer Capital, early 12.5% investor in Facebook:
Although the use cases above are relatively easy to visualize, how the VeChain Thor Blockchain will actually function is more elusive. With the rebranding of VeChain to VeChain Thor Blockchain due to take place on the 26th February and the public chain of VeChain to be launched in June, part 2 will explore how the value created by use of the VeChain Thor Blockchain could translate into a market cap for VET in 2018.
I am not your financial advisor. This is not financial advice. I own some VEN/VET but am not affiliated with VeChain in any way.
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