Sjoerd den Daas, reporter of the Dutch Financial Daily reached out to VeChain’s CEO Sunny Lu to talk about the fast growing project. The article was published in the Dutch newspaper on January 23, 2018. Below a translation.
Exchange platforms, issuers of crypto tokens and traders. Nobody seems safe in the hunt that the Chinese authorities opened last September on everything related to cryptocurrencies. Nevertheless, the dust seems to be settling and the future starts to look bright again for VeChain, that quickly became one of the major Chinese projects after NEO and Qtum and TRON.
Initial Coin Offering
“We were lucky,” says CEO Sunny Lu in an interview with the Dutch Financial Daily. In 2015 he stood at the cradle of VeChain, China’s best performing cryptocurrency this year and already rose about 360%. “Crypto might look like a bubble now, however in ten years’ time we will look back and conclude that this has only been the beginning.” At the time of publishing, the total market cap according to cryptodata collector coinmarketcap.com was as much as $2.8 billion.
In mid-August, they raised $25 million from investors with an initial coin offering (ICO). Shortly thereafter, China came up with an extensive package of laws and regulations that banned this method of fund raising. “The market was a mess,” says Lu. He welcomes the new guidelines from the government. “This was badly needed.” Although the ICO formally took place in Singapore, the witch hunt in his industry had big consequences for his company. Lu and his colleagues were forced to refund participants from China, equalling 130 million tokens. This was done as a precaution, says Lu. ‘In order to maintain a good relationship with the Chinese government.’
“I prefer to look at the practical applications that blockchain can bring to society, and this is warmly welcomed by the Chinese government”
– Sunny Lu, CEO VeChain
Another grey area in China is bitcoin mining. Earlier this month the Chinese authorities targeted this industry, whereas the central goverment encourage local governments to gradually stop preferential policies for miners. “Only when there is an explicit deadline, and bitcoins are declared banned, I start to worry,” Xie Jinming clearly states. He is the founder of Inner Mongolia Block Cloud Computing, a relatively small mining operator in China.
The mines are under supervision of the local government. They often have little interest in closing it. Cryptomines generate employment, provide rental income on empty industrial sites and in many cases the operators share profits with local electricity companies.
“The electricity prices in Inner Mongolia have increased recently”, Xie says, asked about the most important changes. “Other than that, our activities have not been influenced so far.” According Xie, in Sichuan province, where many bitcoin mines run on energy from hydropower, prices have remained the same. Bitmain, China’s largest operator of bitcoin mines, was not willing to comment on this topic.
Government wants to cooperate
“Mining is a business on itself,” says Sunny Lu, “I prefer to look at the practical applications that blockchain can bring to society, and this is warmly welcomed by the Chinese government.” ‘For luxury brands, blockchain technology offers a solution to combat counterfeit products.’
“I can say that the interest in our services is enormous. We receive requests almost every day, both from companies as well as from government departments”, Lu says. There have been rumors for a long time that VeChain would be in talks with the Chinese government for what could possibly be the largest blockchain contract in the world. “I can not comment on that,” says Lu.
“We are not talking about concepts here. This is a system that has already proven itself several times.”
– Sunny Lu, CEO VeChain
VeChain is already working together with government departments in various cases, among them is food traceability. An important topic in China, where trust is hard to find after several food scandals. There is also a project where imported products can be traced in order to prevent fraud with import duties and the like. Lastly, there is a luxury brand using blockchain technology to fight counterfeit goods.
More than concepts
“This is just the beginning”, says Lu, “We are not talking about concepts here. This is a system that has already proven itself several times.” According him, the value of VeChain lies mainly in the ‘right to use public infrastructure’ and also in the ‘speed’ of the network. “A digital currency that can support more trade should have a higher value”, says Lu, who used to be Chief Innovation Officer for China at luxury brand Louis Vuitton.
The market gives him the benefit of the doubt for the time being. A few months ago he was a big unknown even for well-established crypto investors. Now VeChain joined the top 20 largest crypto coins by market cap. Since their ICO, the valuation of VeChain has already multiplied more than a hundred times. However, Lu does not want to know anything about a bubble.
Coming back to the enormous valuation of his token and the persistent craziness on the market, Lu says “Compare it to the Internet in 1995. People quickly concluded: this is a bubble. Eventually the perception of the market was wrong. Now we know that the internet has changed the world. It is my firm belief that the same role is reserved for cryptocurrencies, and blockchain technology in particular.”
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