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Grayscale Investments, the company behind the Bitcoin Investment Trust, is creating a new fund whose sole objective is Horizen, a little-known platform hosting a currency called Zen.
Investment is significant because some large institutions rely on grayscale funds to own the cryptocurrency, and for Horizen's attention to privacy.
The grayscale investment came by buying $ 6.3 million Zen tokens. Like seven other funds managed by Grayscale (which is a subsidiary of the cryptocurrency conglomerate Digital Currency Group), the Zen Investment Trust is required to hold a single currency and sells trust shares to investors.
As for Horizen, it is a privacy-centric cryptocurrency platform that uses a technology called "zero knowledge evidence". Demonstrations allow users to show a transaction without revealing any additional information.
This type of platform, which also includes high-profile privacy ZCash coins, are best known as vehicles for anonymous financial transactions. The co-founder Rob Viglione, however, states that his goal is to take advantage of Herizon's privacy features for services like messaging and media sharing.
In an interview with Fortune Viglione said he hopes that privacy-conscious organizations will use Horizen for sensitive activities like voting and filing medical records.
While many blockchain projects have similar aspirations, Viglione argues that Horizen has taken a step forward in so-called "side chain" technology, a way to process transactions from the main blockchain and then register them on a primary register.
This has the potential to allow Horizen to host large amounts of transactions more efficiently than popular blockchains such as Bitcoin and Ethereum, which have struggled to scale back.
Horizen launched in 2017 as ZenCash before rebranding this summer. The project received a wave of negative publicity in June after hackers successfully launched the so-called 51% percent, practically taking control of most nodes in the network and using that control to falsify transactions and steal currency Zen.
The 51% attacks represent an existential threat to a cryptocurrency network, Viglione says that Horizen has quickly contained the attack and since then has updated the network with a new system of penalties that makes almost completely impossible future attacks.
Grayscale's decision to choose Horizen as its most recent investment vehicle is significant given that the previous trusts it created involve better known blockchains with a higher market value.
According to the CEO Michael Sonnenshein, Grayscale relies on Horizen because the company believes it has superior technology and a strong team. It also predicts that companies using blockchain will pay a premium for privacy-based applications, including file storage.
The Zen of Horizen is currently ranked as the 73rd most popular cryptocurrency. As with other gray scale products, the Zen Investment Trust shares will initially only be available to accredited investors due to regulatory constraints. Subsequently, they will operate on public markets in the same way as Grayscale's Bitcoin Investment Trust shares.
