Blockchain technology is revolutionizing industries across the world. Open and transparent blockchains have many important use cases, but there are also scenarios where enterprises would like to maintain a high degree of privacy while still utilizing the immutable nature of the blockchain.
This is where Horizen comes in. They allow enterprises to build unique blockchain applications on their platform without sacrificing privacy or security.
An important part of the Horizen network is its native ZEN cryptocurrency. Read on to learn more about the ZEN cryptocurrency and its unique use cases for businesses and individuals alike.
What is ZEN?
ZEN is the native cryptocurrency of the Horizen blockchain network. Horizen is a privacy-focused blockchain operated by Horizen Labs, which was founded in 2017.
Horizen utilizes sidechain technology (independent but related blockchains attached to the main chain) to help enterprises and developers build decentralized applications.
The ZEN cryptocurrency is based upon a fork of Zcash (an early privacy coin). ZEN functions as a privacy coin, as well as a governance and utility token for users of the Horizen ecosystem. Read on to learn more about these three unique use cases which we will explore in this guide.
ZEN Use Case: Making Private Transactions
The most obvious use case for the ZEN token involves performing private transactions. As mentioned, Horizen is a privacy-focused platform, and ZEN – the native cryptocurrency of the platform – is no exception.
Private transactions are important for a variety of reasons. One is that the blockchain is an open and public ledger that could theoretically exist for all of time. Horizen is primarily focused on enterprise clients, thus users of ZEN will likely want to keep sensitive transaction information (such as account balances and supplier names) away from the prying eyes of competitors and criminal hackers.
ZEN is a fork of Zcash, one of the original privacy coins, and aims to iterate and improve upon Zcash’s privacy technology. Like Zcash, ZEN offers optional shielded transactions which utilize an advanced cryptography method called zk-SNARKS. These shielded transactions theoretically mask the sender, recipient, and value transacted from all third-party observers.
zk-SNARKS, the technology underlying these shielded transactions, are a form of zero-knowledge cryptography. Zero-knowledge cryptography allows secrets to be confirmed and proven within a network without sharing the secret itself. In this case, the secret being protected involves who is sending the payment, who they are sending it to, and how much value they are transferring. While an outside observer can view that a transaction took place and was confirmed by the protocol, they are not privy to this more sensitive secret information about the payment.
ZEN aims to build upon but also improve Zcash’s privacy by also including default network-level encryption into the protocol itself via secure nodes and super nodes. These super nodes are expounded on in the next section.
ZEN Use Case: Building Sidechain Applications
The primary use case for Horizen is to help privacy-focused enterprises and developers create their blockchain solutions and applications by building sidechains on the Horizen blockchain. Sidechains allow applications to have their own rules and use cases while still being tied to the mainchain (the Horizen blockchain) and enjoying many of its benefits.
To build a sidechain on Horizen an enterprise must run a super node, which in turn requires holding a certain amount of the ZEN cryptocurrency (500 ZEN at the time of writing). Thus, ZEN is necessary and used to secure space for sidechain builders.
Super nodes also require more than 8GB of memory, at least 1000GB of storage capacity, and the ability to remain reliable 96% of the time to participate. This is in contrast to a secure node, which helps to secure the network through extra encryption, but is not necessary to run a sidechain.
Once an enterprise has a super node established they can implement their sidechain and build any related blockchain applications they desire on top of that sidechain. We will explore some of these applications which have been built on Horizen sidechains in the next section.
ZEN Use Case: Utility Token for Sidechain Applications
Finally, the ZEN cryptocurrency is also accepted as a utility token on the applications which are built on Horizen sidechains. A utility token is a cryptocurrency token that users require to interact with an application.
One such application that is built on a Horizen sidechain is ZenDAO (decentralized autonomous organization). DAOs are organizations that are not centrally planned but instead, run on pre-programmed rules written in computer code. DAOs do however require community voting for certain governance decisions, and voting rights are generally given to those who hold a certain amount of a governance token. In the case of ZenDAO, community members require ZEN tokens to participate.
Zen Chat & Zen Hub
ZenChat is another example of an application built on a Horizen sidechain that uses ZEN as a utility token. The secure messaging application implements all of the security and privacy features of the underlying Horizen blockchain while allowing users to join group chats and send direct messages with maximum privacy. Users can use the service by holding a certain amount of ZEN in a connected wallet.
A third and final example is ZenPub which allows users to interface with and publish documents anonymously on the IPFS (InterPlanetary File System). The IPFS is a peer-to-peer network for storing and sharing data in a decentralized way that is not subject to censorship. This is particularly useful for journalists and whistleblowers in countries wishing to silence them. ZenPub users can access additional features and storage space via the ZEN token.
What Makes ZEN Valuable?
As we have seen, ZEN is a very usable cryptocurrency with three primary use cases: privacy, governance, and utility. All of which we have covered in this guide.
As with any cryptocurrency, ZEN can also be used to speculate on the continued rise of its price. Owning the ZEN cryptocurrency is a bet on the continued growth and adoption of the Horizen platform and its ecosystem. As more and more companies move into the blockchain space, and as the need for privacy continues to grow, Horizen is well-positioned to continue growing with new sidechains and therefore new demand for the ZEN cryptocurrency.