VeChain Is Theoretically Interesting But That Doesn’t Make It a Safe Bet

VeChain (CCC:VET-USD) is a different animal from most other cryptocurrencies.

A concept token for VeChain (VET).
Source: Shutterstock

In any argument about cryptocurrencies, it’s important to separate their profitability potential from their underlying utility.

As memes like Shiba Inu (CCC:SHIB-USD) have confirmed, you don’t need robust fundamentals (or any fundamentals) to spark significant upside.

Admittedly, it’s difficult to do for VeChain as it represents the next logical step higher in the blockchain evolution.

At first, cryptocurrencies entered our reality to promote frictionless exchanges of assets of economic value across the internet. Obviously, the initiative was successful.

Soon thereafter, many tech wizards wondered if they could apply blockchain solutions for other applications.

The advent of the smart contract—the ability to foster deals without the involvement of a third-party (human) intermediary was nothing short of revolutionary. If it’s possible for two parties to agree to terms through these mechanisms, then the sky’s the limit regarding use cases.

For VeChain, the focus is on blockchain-powered supply chain platforms.

A Closer Look at VET

Coinmarketcap.com states that VET “aims to use distributed governance and Internet of Things (IoT) technology to create an ecosystem which solves some of the major problems with supply chain management.”

That’s a fancy way of saying that VeChain removes the centralized administration of supply chain protocols and instead fosters a consensus-driven directive.

More importantly, the decentralization of supply chains offers a critical advantage.

“Using transparent technology with no single point of weakness or control allows for greater security, efficiency and ease of tracking products in a given supply chain, while reducing cost through trustless automation,” according to Coinmarketcap.com

Indeed, cyberattacks such as distributed denial of service (DDoS) can grind an enterprise to a halt. Thus, decentralization distributes vulnerability points, allowing enterprises to be resilient.

VeChain Solves One Problem, Introduces Another

Obviously, I don’t know the late great President Abraham Lincoln personally. But if I did, I’d imagine he would tell me that he’s not a big fan of VeChain or any other utility-based cryptocurrency.

I mean, the man quoted poet John Lydgate. “You can please some of the people all of the time, you can please all of the people some of the time, but you can’t please all of the people all of the time.”

That’s the enticement and the disappointment of the blockchain, quite frankly.

Listen, I’m just taking the VeChain concept at face value. Its white paper acknowledges that the underlying project seeks a distributed governance to manage its supply chain ecosystem.

Well, a distributed governance by default means that the buck never stops at any one place. Instead, it could be here, it could be in China, or it could be somewhere in Lithuania.

With VeChain or any other popular blockchain initiative, we speak of the underlying technology as if decentralization is the long-sought-after solution that contemporary digital innovations have finally made a reality.

Ignored is the fact that every innovation has its set of pros and cons.

For instance, following the advent of the internet, we’ll never go back (willingly) to an analog ecosystem. A digital ecosystem presents digital problems unique to it, though, such as hackers being able to siphon your life savings with a few mouse clicks.

For VeChain, its decentralized nature makes its network more secure. You can’t just attack one point of vulnerability; you must address perhaps an impossible number.

The distributed governance of said network means that if something, anything goes wrong, no central administrator exists that can go in and perform a manual override.

Such democratization limits VET’s appeal.

Where Will the VET Price Head?

Now, my pointing out my reservations for VeChain doesn’t necessarily mean that VET will crumble. The underlying crypto coin has soared up the charts, ranking at number 24 in terms of market capitalization.

Further, while I advise against magical thinking about the blockchain when performing due diligence for any digital asset, you can’t trust the masses to use calm, objective analysis.

Heck, even Yale professor Robert Shiller mentioned that some of the speculative fervor that’s present in contemporary markets was evident leading up to the Great Depression.

So, if the masses believe that VeChain will swing higher, I wouldn’t necessarily bet against them. Nevertheless, you want to be the grownup in the room. At some point, speculation gets out of hand and when it does, the results can be ugly.

InvestorPlace does not regularly publish commentary about cryptocurrencies that have a market capitalization less than $100 million or trade with volume less than $100,000 each day. That’s because these “penny cryptos” are frequently the playground for scam artists and market manipulators. When we do publish commentary on a low-volume crypto that may be affected by our commentary, we ask that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.

 Read More: How to Avoid Popular Cryptocurrency Scams

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.


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