Horizen's Viglione: zero-knowledge proofs will link private and public chains

Ashton Addison: For those unfamiliar with Horizen, what is the platform and what are you working on?▶ 00:22

Rob Viglione: Horizen is a programmable blockchain platform focused on privacy. We implement it in a sidechain context using zero-knowledge cryptography. We're very much crypto geeks, focused on data privacy and on getting blockchains to scale to the mainstream.

Ashton: What problems are big companies running into as they try to enter the industry?▶ 01:03

Rob: There are a few big ones. The most important is that a lot of enterprises don't know how to use blockchain, or why they would want to. Everyone knows it's an important technology and the future in some way, but many are grappling with how. So one of our biggest focuses at Horizen Labs, the software development company, is getting enterprises familiar with the technology and guiding them to use cases where blockchain actually makes sense, rather than using it for everything. Other problems are congestion on popular public networks and prices that scale with usage in ways that don't suit large-scale adoption. The last one, and our bread and butter, is that businesses and their customers don't want to put sensitive information on a public ledger without strong privacy.

Ashton: What does enterprise adoption look like halfway through 2021 compared with a year ago?▶ 02:23

Rob: The two biggest blockchain stories of the last year were NFTs and DeFi. For enterprises, NFTs are the entryway. They're thinking about them far more broadly than collectibles, including things like digital subscriptions that reach tens of millions of customers. DeFi hasn't really been an enterprise adoption story, but for some, like our partner and customer Celsius Network, it's a major part of the business. Celsius is the largest lender in the crypto space. It takes crypto deposits and lends out dollars or cryptocurrencies, and on the back end it gives yields to users by participating in DeFi. Stablecoins are another big one. But use cases like supply chain and IoT haven't exploded in the same way.

Ashton: What technology are you offering enterprises, and in what architectures?▶ 05:11

Rob: We provide solutions across the whole spectrum. At our core is a fully decentralized public blockchain. Our product is an SDK, a software development kit, that a group of developers can use to launch their own layer-one blockchains. Those chains operate independently, but they're interoperable by choice with the public Horizen ecosystem, and our cryptocurrency can act as the gas on them. They can be private consortium chains, like in the Hyperledger and Corda part of the industry, or fully public and decentralized. We can also provide services in between, from smart contracts to issuing tokens, NFTs and stablecoins. I'm speaking a little about the future, because we completed development a couple of months ago. It's been through audit and third-party testing, and we're getting ready to go live at the end of Q3.

Ashton: How scalable is the Zendoo sidechain system, and what does that mean for enterprises?▶ 07:17

Rob: It's massively scalable, and we're positioning ourselves as blockchain infrastructure for the enterprise market. We've taken meticulous steps over the years, some of them humble and quiet. We've built the largest node network in the industry, with over 40,000 servers running around the world. Each Zendoo blockchain is proof-of-stake, and we can run about a thousand of them in parallel. That's more than 10 times the most scalable competitor we come up against. On the main chain we can support about three million transactions per block, with a block every two and a half minutes. That comes to about 20,000 transactions a second. It's not meant for high-frequency trading, because we have a global distributed network, so it isn't lightning fast. But it's massively scalable for real enterprise-level blockchain use cases.

Ashton: What is the advantage of having tens of thousands of nodes?▶ 09:16

Rob: First, your network never goes down. We've seen other networks go down for days, which is strange in a blockchain context, and that happens when a network doesn't have many nodes. For us the probability is close to zero, but you can achieve that with hundreds of nodes, not 40,000. The reason we have 40,000 or more is the sidechain system. We want to build a sidechain marketplace where anyone can launch a sidechain. With a thousand blockchains running in parallel, 40,000 nodes might even be too few, although nodes can run multiple sidechains. We built the network specifically for that purpose and it's been very successful so far.

Ashton: Why would enterprises with their own private chains need the Zendoo sidechain?▶ 10:40

Rob: Zero-knowledge cryptography had a bit of a splash when Zcash went to market. From 2022 and beyond, I think zero-knowledge proofs will be the critical missing link between private and public blockchains, much like the link between intranets and the internet in the early days of networking. You can run your own private blockchain and still use our public network through the Zendoo protocol to verify that the transactions on your private network were valid and followed the rules of the system. You can publish the rules so the world can see them, but you don't have to disclose the data on your private network. We want to bridge the gap between public and private blockchain. That gives enterprises the information integrity and immutability that blockchain brings, along with the privacy that governments and enterprises are going to demand.

Ashton: You've been working on this for a while. Where does deployment stand?▶ 12:37

Rob: We took the longer path, which has been a little painful. We came up with the idea three years ago, when we were thinking about how to scale blockchain to the mainstream. It's a modular architecture, and the idea of all the world's economic activity going through a single blockchain just doesn't make sense. It's taken three years because it's very sophisticated technology that uses zero-knowledge proofs to link all the sidechains back to the main chain. You can issue your own tokens on your own layer ones, deployed with our SDK, while still leveraging the main network for security. We've been done with development for a couple of months, but because it's such an important upgrade, we're going through two independent third-party audits. We just received the results of the first and passed with flying colors. We're integrating some findings and have already tested a deployment from one testnet to another. We're looking at a mainnet deployment at the end of Q3, maybe a little sooner if things keep going this smoothly.

Ashton: What will drive adoption of Horizen's technology among enterprises globally?▶ 14:28

Rob: We're starting humble and very specific. The product we're building for Celsius is called zk audit, and it's a showcase of how powerful the technology is. We can audit all of Celsius's cryptocurrency reserves in near real time. Right now you have to trust the company and its auditors, who maybe audit annually. Now we do cryptographic audits of the reserves in near real time using zero-knowledge proofs. We don't leak information about institutional clients or fund flows across the network, but we still prove cryptographically what reserves they hold. We can even audit private blockchains with this product. Everything that firms like EY and PwC do manually, we can now do, at least in the cryptocurrency world, in near real time with cryptographic certainty. This is just one use case. Our path to market is to build modules that others can add to the SDK to launch their own platform, such as an NFT module, a stablecoin module, a decentralized exchange module or an automated market maker module. Think of enterprise-grade versions of everything going on in crypto, with low cost, best-in-class security and best-in-class data privacy. We're already using a beta version with early clients to battle-test it before mainnet.