Sazmining Podcast Episode 6: Rolf Versluis on the Landscape of ASICs
Synopsis: In Episode 6 of The Sazmining Podcast, Will speaks with Rolf Versluis, Co-Founder of Horizen. They discuss the current ecosystem of ASIC machines, virtual reality, how ZCash is different from other cryptocurrencies, and more.
Will Szamosszegi (00:04):
Welcome to the SA mining podcast at SA mining, we are bringing you into conversations with today's industry leaders and blockchain and cryptocurrency. Our goal with this podcast is to improve the understanding and adoption of blockchain and cryptocurrency. By giving you an insider's look at what's being built and inform predictions on what the future holds.
Will Szamosszegi (00:25):
William Simi is the CEO and founder of SA mining, Inc. All opinions expressed by William or his GU on this podcast are solely their opinions and do not reflect the opinions of SaaS mining. You should not treat any opinion expressed by William as a specific recommendation to make a particular investment or follow a particular strategy, but only as an expression of his opinion, this podcast is for informational purposes. Only
Will Szamosszegi (00:53):
Today's episode is sponsored by block by and cogent log room. Our listeners can visit block by.com/sa mining for an exclusive offer for cryptocurrency management and check out cogent law group for all your legal needs in today's podcast. You'll learn how side chains work, what a zero knowledge proof is and how it works. Future use cases for blockchain technology challenges with inflation and traditional monetary systems, the impact of blockchain and cryptocurrency on society and what life is like on a submarine. Welcome to the podcast, Ralph.
Rolf Versluis (01:36):
Great to be here, William.
Will Szamosszegi (01:38):
Yeah, I've been really looking forward to this conversation. What you're working on with horizon is extremely interesting. Can you just talk a little bit about your journey with the company and, uh, how you guys got to where you are today?
Rolf Versluis (01:50):
Sure. Yeah. Well, horizon started out as, uh, this was back in gosh, 2016 and, uh, I was doing mining back then. GPU mining, still do a little bit of it now and finding different things to mine and Z cash launched. I was like, oh, that's pretty neat. Cuz uh, you know, Zcash was a neat new coin. We couldn't mine it with Equihash and uh, started mining Z classic, which was a fork of Z cash. So forks weren't as common back then and had had a great little group of, you know, freedom and private, uh, sea minded individuals there on the, on the rocket chat. We're like Z classic is great. We're doing neat things with it because it's just like Z cash, but there's no corporate overhead. So how do we start improving it? And everybody's like, well, we can't do that. We don't want any organization or anything.
Rolf Versluis (02:41):
So I started talking with like-minded folks and, and found, uh, one of the other fellows on the rocket chat, Robbie GLI. And we talked about, you know, how we wanted to use cryptocurrency and blockchain to enable privacy and freedom, but we were kind of constricted by, uh, Z classic. And so we said, well, why don't we do something new and different that kind of takes some of our ideas and lets us lets us launch that. So we did that and we launched back then it was called Zen cash. Uh, we launched horizon, uh, in may of 2017 and uh, which is a little over three years ago now <laugh> so it, it, the time's gone by quickly, but that was the, the Genesis of it.
Will Szamosszegi (03:25):
Wow. And so you guys ended up, was, did you rebrand when you went from Zen to horizon or was, was that just from the start, you guys, uh, just knew that you were going to take that type of an approach?
Rolf Versluis (03:38):
We, we weren't sure that we were gonna take, uh, that type of approach. We, we knew that the ticker Zen was kind of cool, you know, got it on my t-shirt right. So we, we started out with Zen cash and we designed it from the get, go to have, uh, private and public transactions, um, as well as having the ability to pay for nodes, kinda like dash does and to have a treasury to cuz we knew we were going to want to improve it and do some things with governance and node tracking and uh, get it to all sorts of different people in the world. We knew we'd need to be able to hire, uh, software developers. So that was the, that was some of the key things, uh, that were in it. And as we, uh, continued down the line, we kept getting confused with Z cash and sure, we, we for, we had a copy of Z cash is, is how we started out. But especially in the United Kingdom where they call Z cash, Z cash. So Z cash, Zen cash, it just wasn't working for us. We needed to go a different direction. So we, we got a, a branding consultant cuz we had some funds in the treasury and worked through a whole branding exercise and decided that horizon was a good, a good name that, uh, was aspirational enough that, uh, we could adopt that as our name.
Will Szamosszegi (04:53):
Yeah, there you go. Well, one of the really impressive things about what you guys have done is you've really started, I mean starting any type of network, just getting past those initial parts of building up the network, getting to a certain scale where you can really start getting adoption and more users on the platform is a challenge for any type of, uh, any type of company who's trying to build on blockchain and build using blockchain technology. So can you talk a little bit about those early days and how you really started to scale up the platform and what the vision was moving forward?
Rolf Versluis (05:30):
Yeah. You have to have some kind of network effect in order to have a network effect. You need users. And we looked at starting a blockchain fresh from a zero Genesis block and uh, bootstrapping as it were in getting our, our users. But one of the developers we worked with said, let's do it as a chain split. I didn't really know what a chain split was. Now. Most folks knew it, know it as a, a hard fork like E Ethereum and Ethereum classic Bitcoin Bitcoin cash. But this was back before, you know, that was a standard way to, to launch. So by launching as a chain split or a fork, we immediately had a bunch of people that already own Zent, uh, because it all had been all the people that were mining Z classic. And that was the way to get new users was to get GP mins and make it a, a good cryptocurrency.
Rolf Versluis (06:18):
But of course, as you know, you gotta get listed on an exchange. So for fortunately, Z classic was already listed on Bre, which, you know, Bittrex has, has grown into really one of the top exchanges. And it was difficult at the beginning because as soon as we launched, we realized that the, uh, transaction replay protection that was supposed to be written into the code expired after a few weeks, which means that if someone withdrew their, um, Zen cash from bid tracks, they could replay that transaction onto the Z classic exchange and withdraw the equivalent amount of Z classic. It was really scary. And uh, so we got on the phone with, uh, with the folks at bid tracks back then there were a smaller organization. I talked with the owner and he's like, yeah, we're a bunch of ex um, Microsoft security guys. We know how to deal with these kinds of things.
Rolf Versluis (07:10):
We're gonna shut down your wallet. We're gonna keep the training open. We're fortunate because my partner in this Rob, the Leoni make is, does a great job at making contacts in the industry. And he had contacted, uh, and got to know a guy named Charles Hoskinson, who we met when we went to, um, went to the may meeting in, um, in New York city for crypto. And we met Charles Hoskinson there. And when we had this problem, the issue was either me or Rob or software developers. We were planning on hiring developers. We were figured out we'd have like three to six months <laugh> we didn't realize we'd have a problem right away.
Will Szamosszegi (07:46):
Rolf Versluis (07:47):
Ho Austinson got us one of this team of developers, uh, out of Ukraine and they fixed the transaction replay code, opened up the wallet again on Bittrex and gave us some breathing room. Wow. So yes, we had users. Yes. We had exchange listing at the beginning, but it was a pretty rough start. We knew we were gonna accomplish, we knew we had a path because we had a coin, it was listed, it had good features. We had a plan and we had funding, but that was all we had at the time. So it was, it was kind of a rough start.
Will Szamosszegi (08:16):
Yeah. In interesting. Yeah. Cuz that just makes me think too, you, there were so many benefits that you derived from trying to build it off of a fork. I mean, automatically you had the, the benefit of potentially getting listed on an exchange or I'm not sure what that whole process was like. And then you also had people who actually knew about your project and were automatic holders. So there's some sort of incentive there for them to, uh, buy into that, that community that you're building. But after you go, you got through that initial stage, I guess. At what point did you, uh, did you bring in the funding and then following that, uh, initial stage where you, you got got the code fixed, how did you take those next steps to continue growing the organization?
Rolf Versluis (09:00):
Yeah. And, and this, this applies to, you know, lots of, you know, small business growth, um, where you need to grow from having two people, an I, an idea into an organization that's able to accomplish things. And, um, one of the things that, um, you know, the famous startup, uh, an investor mark Andreson talks about is if you have, uh, three things, you know, a good product, a good market or a good team, which one's gonna have the most, uh, overall impact in the growth of a, uh, and success. And a lot of people say a good product or a good team, but his point is that it's a good market. If you're in a good market that has a demand, it'll pull a good product in, out of a team and you'll pull a good team together. And at that point, and still we had a really good market.
Rolf Versluis (09:45):
Cryptocurrency is in, in the very small stages and it's rapidly growing and, and people who get a feel for it and see what it can do and be like, uh, they're converted. And so by having a good market and having funding, we didn't have to do sales because, uh, at that point it was 8% of the new Zen that was mined would go to our treasury, which were then able to turn around with, but we had to build a team. And the first thing we had to do was hire software developers. We started with contracting, um, and then over the next few years we hired a team and kind of carved our own, uh, path. And a couple years ago, Rob came with this idea that we needed to do something different and unique, uh, to really establish our place in the crypto universe. And so we, we took our software development team and pointed them towards doing that, doing minor updates all along, but focusing on this big project, uh, which is now in Testnet, the, the code is public. And we're looking at going live on main net and in first quarter next year.
Will Szamosszegi (10:52):
Yeah. That's great to hear. And when you're talking about that main differentiation or what you are trying to solidify is what sets your protocol apart from others out there? What is it really that, uh, that you guys do differently?
Rolf Versluis (11:08):
Yeah, it involves in, uh, scaling and being able to do other applications than just sending transactions. So we started with good base, which is built on, uh, Bitcoin blockchain type technology with the ability to do private transactions, uh, like Z cash. The issue that we started noticing because we wanted people to use our cryptocurrency. So, um, we would pay people to operate nodes. And now for example, we have a, really a faucet that is used a lot by people to get new introduction to cryptocurrency. The problem is, uh, scaling to be able to get a lot of transactions onto that blockchain, where the copy is maintained by everybody. Bitcoin solves that issue by having very small blocks and using, uh, second layers, centralized exchanges, decentralized exchanges, lightning, um, all sorts of different things to, but even so if you wanna run a Bitcoin full node, I think you have to have 500 gig hard drives or something like that.
Rolf Versluis (12:09):
Uh, Ethereum works to scale theirs, um, and you have to have a, a pretty Sable node. So the differentiating thing was, we talked about doing side chains and side chains is basically creating and running your own blockchain, but that's tied to an existing cryptocurrency. So there's a ability to, uh, safely transfer funds from the main chain to the side chain. And the side chain, uh, can use that, uh, that currency as the coin of the realm and the side chain, and then to safely transfer it back and being able to safely transfer it there and back without the ability to have any collusion or, you know, decentralization was one of the key things that was designed into the main idea of side chains, but nobody had ever accomplished it before and we've accomplished it.
Will Szamosszegi (12:57):
Yeah. That, that's interesting. So what you guys did to solve that problem, unlike Bitcoin or Ethereum, you built into the protocol, these side chains that would allow people to transact, uh, with privacy, is that correct? Or am I missing something well,
Rolf Versluis (13:17):
So the side chains can do anything because the uniqueness is in, what's called the forward and backward pegs. So imagine that you created a side chain, you, you, you send funds to a side chain and then you accept funds back, but all of a sudden you're getting more funds back from the side chain, then it was ever sent there in the first place. That's kind of a problem.
Will Szamosszegi (13:38):
Yeah. <laugh> um,
Rolf Versluis (13:39):
The other problem is all the other side chain designs that, that have been, uh, launched out there require a trusted set of certifiers to say, yes, this transaction is allowed to go back to the main chain. So our lead software architect, cuz one of the things we've been able to accomplish over the last few years is to build a, uh, strong, uh, software development team that has, you know, project managers and architects and cryptographers and front end developers, backend developers. The idea that he came up with was based upon the zero knowledge proof technology that Zcash has pioneered. And so the idea of zero knowledge proofs can be encompassed to other things as well. Um, one of the things that that Zcash designed into was having, um, uh, a small character field, kinda like the memo field on a, on a check is the way that they like to describe it.
Rolf Versluis (14:32):
So you could send private messages and everybody would have to keep a copy of it. The issue is that these, uh, these zero knowledge proofs that are on the blockchain, they're pretty big, they're bigger than a unshielded transaction output, a UT XO. So it causes the blockchain to grow rapidly and that that's nice. It it's also focused in the realm of finance. So the idea of zero knowledge proofs though, is very important because you want to be able to send information to it, to other people and not necessarily have the whole world be able to, to read it or, or understand what it is. So, so we took, um, that idea of zero knowledge proofs, and I'm not gonna claim credit for this. I'm not the architecture software developer. I just explain it to people <laugh> um, but designed, uh, something called a recursive zero knowledge proof, and used that to create the, basically to the side chain. And then that zero knowledge proof IOU is used to return funds back to the main chain,
Will Szamosszegi (15:39):
Thinking about how that can be applied. That's one of the things that, uh, I think is very valuable that a zero knowledge proof has that many other types of protocols don't have. And it's just that privacy. It
Rolf Versluis (15:51):
Could be as simple as just doing business in the business world. So say you wanted to pay your employees and suppliers, um, in Bitcoin. Okay, great. I'm gonna start paying all my employees in Bitcoin. All right. So someone can figure out, Hey, I'm getting a paycheck from this wallet. I wonder what other transactions are being sent from this wallet say, well, it's a 50 person company. Look, there's 50 other transactions. And here's what the amount is. They can start figuring out what all their fellow employees are getting paid because they're using Bitcoin and it's a blockchain where everything. So imagine being able then paying your employees in Z cash or Zen private transactions. Nobody can see how much everybody else is getting paid or you're paying your suppliers or your customers are paying you and your competitors can all of a sudden see everything that's getting paid. So you don't even at a basic level of doing business. You don't necessarily want other people to see what the value and amount and frequency of the transactions are.
Will Szamosszegi (16:48):
I'm really interested to hear what the current landscape looks like today. And I mean, how many of these applications are truly being built? What are some of the challenges that you're facing and uh, just really see kind of where we stand <laugh>.
Rolf Versluis (17:02):
Yeah, no. And, and it takes a while to build something. So you
Will Szamosszegi (17:05):
Rolf Versluis (17:06):
I still boom, that we had in, in 2017. Well, some of those organizations, they got funds, um, they got investment and then they hired a team and they've been building. And so it takes time to build something. And I think that's part of why we have a crypto price cycle. So people see some things happening that, um, you know, folks have been working on for a few years. They get very excited about it. And then other people project to where it's gonna be, then folks come into the market and say, that's what we're doing right now. We're replacing governments with blockchain. Woohoo. <laugh> no, no, no. We're not doing that. We can possibly do that in the future. Or maybe there's parts of the world where the government's not as strong or there's, uh, you know, parts of the world where the money's not as good.
Rolf Versluis (17:52):
Or if we're setting up a new, uh, virtual, uh, nation online and we want to have governance in that, these are the things that can be applied to. But a lot of folks just ignore that and say, we're replacing governments blockchain to the future. I gotta buy. Then you get people that come in and say, well, I wanna start mining. Right. I need to have, I need to buy a thousand miners and I need to start mining next week. <laugh> and I'm sure you've probably had conversations with people like that. And you're like, well, let's talk about
Will Szamosszegi (18:19):
That. Yeah. When everyone's buying miners, that's probably a sign that it might not be the best time to buy miners. Right. Especially if the manufacturers on are on back order for months on end, then you gotta kind of expect that the cost of that equipment is a little bit inflated. <laugh>
Rolf Versluis (18:35):
Mm-hmm <affirmative> exactly. And you know, GPU mins are really happy mining Ethereum right now, because of all those, those fees on, on defi. So like you said, maybe when miners are really expensive, you shouldn't be buying them. Maybe you should buy them when they're inexpensive.
Will Szamosszegi (18:50):
Rolf Versluis (18:51):
<laugh> and have a longer term outlook on, on what you wanna accomplish.
Will Szamosszegi (18:54):
Having as six S on a network is actually very beneficial cuz over time that just protects you from being a target of these 51% attacks.
Rolf Versluis (19:04):
Uh, well, I mean, there's so many different factors that go into it. So I'm not certain about that. I think that's a valid way of looking at it. Um, especially when there's a lot of just general purpose, GPU hash power, I mean, nice hash has done a good job with their operating system where you plug that into your GP mins and they'll switch to mining, whatever it was, whatever it is that they're they're demand has. Yeah. So I, I think the economic incentives, if you spend a thousand to $2,000 on a Equihash minor or you buy 10 of 'em or a hundred of 'em or a thousand of them, why would you want to attack the cryptocurrencies that you're able to mine that just decreases their value? So I, I think that's a valid argument.
Will Szamosszegi (19:51):
Yeah. I think it makes sense as well. I mean, that's one of the things that people in, in the, especially in the Bitcoin community and in the mining community, they'll talk about, uh, well, how secure is, is Bitcoin. And that's one of the risks that sometimes when people are afraid to jump into Bitcoin, they're afraid they, they attack the, the security aspect and say, well, what if a 51% attack happens? And I mean, if you think about it, just having all those Asics, having all that hash power on the network, it does insulate Bitcoin to a certain degree. Uh, I mean, in terms of the actual amount of computational resources being put towards any network, Bitcoin is foreign, uh, above all the other networks that are currently out there. And I think that that's one of the things that makes it so resilient and over time, uh, you kind of have to get through those growing pains and be able to be insulated from a sort of 51% attack. So, uh, it's great that you guys are making that move towards becoming a more resilient network and you definitely have had some of those, uh, initial scares, but you've made it through <laugh>.
Rolf Versluis (20:57):
Yeah, we have. And, and unfortunately our, our, uh, chief architect, he came up with an idea that prevented a 50 or made it much more expensive to do a 51% attack. And we implemented that into our code,
Will Szamosszegi (21:10):
Building an organization. There, there are many steps to it and it's definitely very challenging. It seems like right now, a lot of these companies, uh, surrounding zero knowledge proofs, they're currently in that, that building stage, they're trying to build software, trying to increase adoption. Uh, where do you think the industry's going to be in the next five years?
Rolf Versluis (21:30):
Yeah, I think it'll kind of get people get pushed into it. So the folks that are building the software and the systems, and you mentioned there's a lot of minors out there. I think the amount of electric power used by Bitcoin mins now is on the order of the output of 10 Hoover dams or something like that. It's, it's, it it's a lot. So there's a lot of energy and, uh, ideas and, and people that are putting these systems in place. And some folks have, you know, studied history and can looked in the past to see what kind of crazy things people can do to each other or how they organize or, or types of systems. So I think a lot of the systems are being built. Um, but then, uh, these days it seems there's large, either large organizations or governments that do things that push people in a direction.
Rolf Versluis (22:18):
So I read recently that the IRS was considering taxing everybody on their cryptocurrency holdings. So you would have to report all your cryptocurrency holdings and then get taxed on it. Well, to me, that's a push, that's a push in everybody wanting privacy on every cryptocurrency right now. Right. So, you know, if, if that happens, all of a sudden there's gonna be a large focus on privacy cryptocurrencies, then there's gonna be a huge focus on what Ethereum's doing with decentralized finance. You can get on UNS swap and you can trade for something, you know, wrapped in, in, in Ethereum or whatever you don't need anybody's permission. So back to the original design of Bitcoin is being able to transact without having anybody's permission to do so. That's a very powerful idea. And with centralized exchanges, having to go through know your customer, anti-money laundering all sorts of other things.
Rolf Versluis (23:14):
I mean, I'm not legally allowed to get onto Binance, right. So I I'm just not allowed to, because I'm part of the, you know, us government tax regime. Um, and I can't do it. Uh, and so there's a lot of opportunities that, that, that I don't have, uh, because of that. And so that's frustrating, I'm sure there's people in, in the United States that are frustrated by that as well. Um, but if, if you start looking at, you know, governments pushing people or trying to take things from them, uh, and putting them into permissioned environments, you you're gonna see, uh, people doing other things focused on privacy. So what I think the defi, um, revolution, whatever you want to call it is happening in Ethereum right now is first there's a lot of people that like to gamble on things. Yep. It seems like there's a lot of gambling going on there. Um, but the other thing is they're doing it without permission and they're rapidly writing code and some of this, you know, in this explosion of people writing code and creating things, they're coming up with some good ideas on how to do governance, how to, uh, do other things like that. And so we're at horizon, you know, we're, we're talking and saying, well, what is it that really excites people about that? And I still get back to is being able to accomplish something with that you own without anybody's permission.
Will Szamosszegi (24:35):
Rolf Versluis (24:37):
And, and so we're like, well, you know, we're, we're working towards that with, with the side chains, right. Because we could have a rapid payment side chain, it can be like a, a little Venmo app side chain where you just, you know, quickly and it transacts it. Okay, cool. You could have a messaging. All of a sudden you can have all these different capabilities in different languages as their base base language. Um, so I, I think the United States might not be the first place where a lot of the crypto adoption happens. I think it might be in other, in countries that don't have such strong governments.
Will Szamosszegi (25:12):
Yeah. I mean, talking about governments in this type of a context is really, uh, it's really interesting because they're going to be the governments that push away from it. And then they're gonna be other governments that are going to be, uh, moral right. With people transacting and the government being more hands off with it. And, and I mean, just taking all that into account, do you think that these different governments are just going to take different stances and users are going to continue to use these privacy coins because of just the ethos behind it?
Rolf Versluis (25:46):
Yeah. It's uh, and it's tough and it's not, uh, any one thing that's gonna happen in, in one place in one time. Certainly. Uh, I mean, there's, it, it also goes to the fundamental idea of are we owned by our governments and have to do what the people in the government say, or are they actually there to serve what we want? And
Will Szamosszegi (26:08):
That's very interesting. Yeah. I thought about it that way. <laugh>
Rolf Versluis (26:13):
So just cuz the government says you have to do something, do you have to do it? No. I mean, I, I, I got four kids and I'm like, you know, there's so many rules that everybody says they, that you have to follow. And I, especially when you're a teenager, uh, there's all these different rules. There's rules at school, the community at home, uh, you know, church, wherever you go, people are putting their rules on you, but sometimes they conflict and, and you know, different, we get that at the federal state and local level too. And you know, family, uh, rules and different things like that. So, um, I had to give 'em an order of prioritization for rules. Like you come up with your own personal rules. First, those are highest priority. Then it's family, then it's community, you know, then it's other folks. Then, then it's governments like that.
Rolf Versluis (26:56):
And if there's ever a conflict, you go to the higher order rule and you follow that one that might cause conflicts and consequences. But here's the thing. When you break a rule, first, someone has to catch you. Then there has to be a penalty and then they have to enforce the penalty. So there's a, there's a progression. Um, and had the ability when I owned a business to work with attorneys quite a bit. Um, and they always talk about, you know, it's not like there's a rule and you have to follow it or there's no rule and you don't have to follow it. Even when you build your own organization, you build rules into your organization. And those might, you know, those are different rules, but those take a, a higher priority. Of course your organization, if you're an employee could ask you to do something that doesn't meet your moral rules and, and at that point you should not do it or you should quit or you should do other things
Will Szamosszegi (27:50):
That actually outlines it really well. Just taking a step back, going back to what you said, thinking how difficult it was for us to even track how much Z cash was being mined. I mean, having, having the government track, that would be, it would take a lot of man hours and a lot of understanding of just the technology available to even get a ballpark answer on how much was actually mined.
Rolf Versluis (28:15):
Fortunately, the tools are better these days, but I can't even imagine anybody trying to, if they're in a regulatory environment where they need to pay taxes on their, uh, capital gain people in the defi space right now, uh, working out how to pay taxes on, on, on what they make. I mean, the volatility is so crazy and you know, if you buy a bunch of, uh, if you get yourself a bunch of sushi, right. Um, and then, and then try to pull it back out and you're able to successfully do that and you've got it in Ethereum. And then you want to convert it to your local currency of choice. I mean, there's so many different steps. There are you supposed to be taxed on all those transactions? It's, it's unclear. And so when things get too difficult, a lot of people will just throw their hands up and say, I'm not doing it.
Will Szamosszegi (28:59):
Just the fact that when you mind it, you have to record the price of what it is when you mind it and then track the differences in between what happened by the point where you mind that Bitcoin. And by the point you sell that Bitcoin, it's just, it's a way of tracking. That's just so difficult and onerous on the people who are mining and you really need to buy, like we, we use specialized software that allows us to report it in the right way, but it's something that is very difficult. And unless you spend a lot of time setting up those accounting processes, it, it's almost impossible to do if you're just, if you don't have an organization around you, that's actually building that out. And people having people do that is a full time position.
Rolf Versluis (29:44):
Yeah, exactly. And so that's why, if anybody's thinking of mining, they need to engage a consultant that can set them up with these types of things when they first start mining. Uh, so that a year or two later, they're like, oh, this is easy.
Will Szamosszegi (29:58):
<laugh> yeah. Thankfully the, the resources out there are getting better and yeah. Uh, it's becoming more manageable.
Rolf Versluis (30:07):
Yeah. No. And, and, and, but if it gets too bad, like maybe like you said, maybe people stop doing mining in the United States and they move on, but, but it does seem like there are enough good people in the different bureaucracy is that try to, uh, help people get to get to where they're going. And, and it seems like there's sensible rules, uh, that are being made out there. So it's not, it's not all doom and gloom. I don't, I don't wanna paint it that way, but I, I do think that there is outside forces and events that can cause, uh, cryptocurrency to be adopted quickly.
Will Szamosszegi (30:40):
Rolf Versluis (30:40):
And one of those, like we see it in, in Venezuela right now, and I know we've talked about Venezuela for years. Everybody has about crypto adoption. But if you look at the stats, there's so much transactions happening on local bitcoins.com because people are actually starting, I believe, to use Bitcoin for, for transactions there, as far as I can tell from, from reading, from not being there.
Will Szamosszegi (31:02):
Yeah. I mean, it's one of those things where if you, if you think about it, it's almost like every single time hyperinflation or a currency gets devalued. One of these catastrophic events happened. It's like a huge marketing campaign in a way for the adoption of cryptocurrency or Bitcoin or, uh, any type of non Fiat, uh, non Fiat currency. I mean, the people in Venezuela, they, they went and they learned about Bitcoin. And now you're seeing higher transaction volumes because they experienced firsthand what can happen in a Fiat currency if your, your government isn't able to manage monetary policy properly. And I mean, especially with the turbulent times we're living in today and the amount of money that the fed is printing, it makes you wonder, when are people truly going to, uh, decide to take their fate into their own hands and start doing the research and, and buy into, uh, some type of digital asset to try and protect their wealth.
Rolf Versluis (32:01):
I think people are wisen up to it. I mean, the internet being able to learn information, you know, anytime about anything is one of the most powerful forces to be able to, uh, give people the ability to live the lives that they want. Um, that it's, it is really gonna take off.
Will Szamosszegi (32:18):
Yeah. Yeah. It's fascinating. It's one of those things too, that it, it seems like every single day that, uh, that so much is happening because we're within like this industry and, and reading about the news what's happening in the blockchain and cryptocurrency industry, but the vast majority of, of the world is unaware of all these things that we're talking about and get, we, we got very technical with some of the things in this podcast, but just understanding the basics behind Bitcoin and, and monetary policy and all these other functions that, uh, it still makes me feel like we're, we're very, very early in, in where this is really going.
Rolf Versluis (32:59):
Yeah. And that's one of the things that I, I like to be part of is those different technology trends as they go through the S curves from, you know, the initial slow and then the rapid adoption. And then, uh, the other part of it's fun being part of those,
Will Szamosszegi (33:13):
Rolf Versluis (33:14):
Technologies are areas because it's grown so fast. People are joining it and, and it's just, it's fun. And there's a lot of different opportunity in this space. So it's not all about necessarily payments or private payments or investing. There's, there's been, I think financial aspect of crypto currencies has been a big target just because, um, you know, banks are such a centralized institution that they've been taking advantage of their position. Uh, and like you said, the fed printing money and other things like that, where it's, it's just, people are having to work harder and harder and they get less and less, um, uh, uh, their paycheck pays for less and less, but, you know, back to what we're doing at, at horizon, that's why we're so excited about side chains, because building purpose, specific apps on, um, blockchain systems and, you know, businesses are doing that with Hyperledger, which are not really blockchain systems.
Rolf Versluis (34:13):
They're more like, you know, just shared distributed ledger systems, but still, they there's a lot of opportunities to be able to use systems where a lot of people contribute to the information. A lot of people read the information and then they do it in a, uh, effective, efficient and orderly orderly way. And I think that aspect of blockchain technology and cryptocurrencies is mostly unexplored still and is really gonna take off minors, provide a, a really a valuable service to the cryptocurrency. And there there's the whole discussion about, is proof of stake, uh, going to be more important than proof of work. And, you know, EOS has their distributed proof of stake. Cardos got proof of stake, Ethereum's moving towards proof of stake. But I, I also like to see what's worked for the longest period of time, and what's worked for the longest period of time granted that, you know, cryptocurrency hasn't been around for a long time in its current incarnation, but the previous versions they failed, Bitcoin's the first one that has worked for the longest period of time. And it's based on proof of work with mining. So there's gotta be something about that part of it that makes makes it successful.
Will Szamosszegi (35:27):
Yeah. And I think it is in part due to the fact that you're tying this digital asset to, uh, real world hard assets, and there are true costs involved with building facilities or your shipping container designs purchasing this equipment. Uh, you're providing the service to the network, uh, helping with decentralization as well. And then there's the actual electricity and mins are essentially creating work, uh, or creating, uh, Bitcoin by the work that they're doing, almost turning electricity into Bitcoin through the system of mining. And it gives a base layer of demand for the Bitcoin network, as well as decentralization, which I think is extremely important. And one of the reasons why you've seen this staying power within Bitcoin, uh, I mean, granted, I think that one of the biggest stress tests in, in recent years for Bitcoin was that liquidity crisis in March with the market. I mean, Bitcoin fell by over 50% in a day, but you still have the baseline holders. You have the baseline minors who are going to continuously be there to support demand within the network. And I think that that's really useful for, uh, for allowing Bitcoin to continue to scale over time.
Rolf Versluis (36:48):
Yeah, I think so too. Um, you know, mine, the mining machines are gonna keep getting more efficient, but I think Bitcoin mins, uh, like you said, with containers are able to find, uh, low cost power. That's not currently utilized and use that to, to add to the overall, um, to the overall system. And so I, I think it's gonna be around for a while now. I do think what's exciting, um, is the ability to have people organized in different ways. So the, the, the base way of organizing has been, you know, in your community with your geographic presence and your, um, your nation and things like that, but with the internet, and especially with every, uh, so many people being pushed to work from home, a lot of people are getting familiar with video technology. And that's one of the cool things about working with horizon is we organize on discord.
Rolf Versluis (37:45):
We have our meetings there, we have the different channels twice a week. We all get together on a call and talk about what's going on. And this is an international group of people. They're all over the place. There's very few people that are in the same city. Uh, we we've gotten a group of programmers together in Milan, but it's people from all over the place. And I think that, um, and, and it helps when you pay folks in Zen that you don't have to transact through the banking system and wire funds, uh, all over that way. You can just pay people however you want to pay them internationally. So I think that's like the glimmering of the beginning of the way that people are gonna organize in the future. So, yeah, instead of organizing into cities, counties, or, or states, um, or companies or things like that, maybe people start organizing around like-minded folks that have a common interest or have a common goal, and that becomes their community.
Rolf Versluis (38:41):
And they transact within that community. They, they, they make agreements within that community and it's not, and it's one that's, you know, all, all over the world. So we need the tools to be able to do that a little bit more easily. I don't think Facebook quite meets the, uh, the <laugh> the capabilities for doing something like that. But, but if you are gonna organize, you know, these virtual nations, I, I don't even know what, what you'd call them. Um, but I think, I think the, you know, blockchain technology and cryptocurrency can play a big part in helping that to happen.
Will Szamosszegi (39:14):
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Will Szamosszegi (39:49):
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Rolf Versluis (41:00):
You know, I've gotten my input that from both from, uh, uh, son who who's got his VR headset and he plays video games on, on it all, all the time. <laugh> uh, and of course from reading science fiction books that, you know, project things out into the future, uh, and, and, and talk about and try to imagine how people would interact in those different types of environments. But from your conversation with that guy, what, what was one of the most interesting things that, that, that you learned?
Will Szamosszegi (41:24):
Well, the last time I'd used a VR headset, it was just very basic. I was trying to play a game. You clearly knew that you were in, you were wearing a headset because of where the screen ended and then the graphics, it was not nearly as detailed as you would want them to be if you're really trying to get to that next level of VR, for example. So I thought it was, it was obviously very impressive technology, but I thought it was extremely limited. Then he started telling me about how VR is going to start going from, from the point where I could clearly tell I was wearing a headset to expanding the screen. So when you're wearing it, you don't necessarily have any type of visual cues that are telling you that you're wearing a headset. And then also just being able to look around, having the processing, just get better and the rendering getting better to the point where things get more and more detailed.
Rolf Versluis (42:18):
And I think, uh, AR augmented reality is, is gonna have its its own application as well. I think back to, uh, you know, a couple of the science fiction books I read on that one by Daniel Suarez, one of them was, uh, Damon one was freedom, but basically they rebuild a whole society there. And the people that are in the new society where these, uh, glasses, that overlays information about everybody that they see around. Yeah, <laugh> the sure you see basic things like their name, but you can see their affiliation, you know, their accomplishments, uh, for people that aren't in the system, you can see their entire financial history. I mean, you got all these back end servers that are like aggregating information and, and posting it in, into this augmented reality system.
Will Szamosszegi (43:02):
You were on a submarine, uh, for a number of years. <laugh> yeah, just very random. But can you talk a little bit about that and that experience?
Rolf Versluis (43:11):
Sure. Yeah. There's not a lot of people that, that have done that, but
Will Szamosszegi (43:14):
Yeah, I don't think I've spoken to anyone who's done that. So I just wanted to make sure that we touched on that <laugh> before I forgot, <laugh>
Rolf Versluis (43:20):
Sure. Yeah, no. I was an officer of the Navy on a, on a us, uh, submarine and, uh, went through the whole, uh, Naval academy, nuclear training, stuff like that. And, uh, was stationed in, in Hawaii in Pearl Harbor on a, on a fast attack submarine. This was in the early nineties. And, uh, the us Navy has, you know, two basic types of submarines. One carries the nuclear missiles and the job is to go to sea for 72 days and not be found. And the other is a more general purpose, uh, submarine call 'em the fast attack, British column, uh, hunter killers and go out there and, uh, you track other ships, stop into places, uh, go stick up in antenna and listen to folks, uh, just in general, just, uh, go around and, and do stuff. And so we'd go away from Hawaii for six months and go all over the Pacific.
Rolf Versluis (44:08):
Sometimes we'd stop into a port, uh, had the opportunity to stop into Brisbane Australia and, uh, Fiji in Japan a couple times. And, and so that was neat. Um, but it is definitely a different way of life. I mean, it's, it's, uh, 120 back then. It was just men, 120 guys, and you're living in a 30 diameter, 30 foot diameter, steel tube, underwater and nuclear power plant. And, uh, you know, that's, that's the, the way of life. And so, yeah, I took, I'm like, yeah, I slept 30 feet away from a nuclear power plant for four years. <laugh> um, and when we're, when I was in Hawaii and I was not on the submarine, it was a lot of fun. And then, uh, people ask me, they're like, is there anything you ever miss about it? I'm like, well, the, a lot of time it was difficult.
Rolf Versluis (44:58):
It was dangerous. We'd always have to practice for if there's flooding or fire or nuclear accident or, you know, a close board explosion or things like that. And so we got trained up and doing all those things, but there is one thing that I kind of missed and that, that was all the people that were on the submarine. They were really well trained. Everybody knew what the mission was, you know, to go out, to see and do this and this and this. So everybody was kind of going in the same direction and you didn't really have any options to go in a different direction. It's not just leave <laugh>. Um, there were some people that worked harder and some people that didn't didn't work as hard, but in general, the folks on there, you know, everyone officer enlisted was, was pretty smart and they knew what they were doing.
Rolf Versluis (45:43):
And we, um, it, it was a very results oriented organization. So it, I maybe I'll poke fun at the air force or army people, but if, but if you're on, on land and you're, you know, sometimes yeah, I have a nephew that's that's in the army. And, and literally one of the things he had to do was go paint rocks white on the army base. I mean, just to me, that's a ridiculous sounding thing. We didn't do that kind of stuff on submarines, cuz there was never enough time and there was all this, you know, electronic and mechanical machinery around and we had missions that we had to accomplish. And so accomplishing things was, was the important thing. So yeah, it was, it was a different way of life because we'd go to underwater for a month or two at a time and work on, you know, recycled air and eat canned food. And
Will Szamosszegi (46:32):
Um, oh my God. I mean just talking, just hearing you talk through, it sounds unbelievable. I mean, you, it's the way that I'm envisioning this is just you guys all being super well disciplined, but extremely busy on the submarine. Like what was the day to day life like when you were there? Like what, what types of things were, were you doing? Did, was it very schedule oriented where you, you were doing the similar type of thing day to day for the entire month you might be down there or was it just very, I guess, uh, fluid and many no day was like the day it
Rolf Versluis (47:09):
Very schedule oriented. So the, the way that Navy does things is, is with, uh, watches and back then we had, uh, you know, a six hour watch. So I would go be the officer in charge of the nuclear power plant for six hours straight and sit in a room with, uh, three enlisted guys and we'd watch the control panels of the nuclear reactor or the electrical plant, the steam plant. And normally nothing would change unless we were practicing a problem. Then, then, then all sorts of things would change. And as I got a little more experienced, I moved up front and would be navigate in the submarine around underwater. So I'd have the six hours of, of watch and then I'd have six hours where I had to learn things and uh, follow up on the, the guys that were working for me and stuff like that. And then, um, I, I was fortunate cuz I was one of the junior officers, uh, the enlisted guys they would have instead of having, uh, six hours of watch, every 24 hours, they'd have six hours of watch. Every 18 hours they'd have to go, uh, do their job on watch where you can't leave for six hours, then they'd have to go do their regular work and then they'd have to, you know, eat and sleep in the next six hours. And
Will Szamosszegi (48:13):
Then, oh my God
Rolf Versluis (48:14):
Watch. And we didn't have enough space. Uh, so, uh, for each three enlisted guys, they shared two bunks. So they'd, there was always somebody on watch. So yeah, there was always a place for them to sleep, but, um, so it was very disciplined and, and after I was on the submarine for a while, I would get the midnight to 6:00 AM watch, which was great until we started our regular day when the captain liked to have drills. So we'd spend, you know, starting at like 9:00 AM, we'd have, uh, you know, close board explosion or enemy submarine or flooding or things like that. Everybody would have to be up and doing stuff <laugh> so I got really good at taking naps.
Will Szamosszegi (48:53):
Yeah. Were, were you on like the warrior diet or something where you, where you're eating like one time a day
Rolf Versluis (48:59):
I tried to eat as much. Uh, the food on submarines is actually pretty good because, uh, they bake, uh, fresh bread and uh, they, they do what they can with, with the canned food and stuff like that. Um, so sometimes though I'd be just so tired that I'd skip a meal for sure.
Will Szamosszegi (49:15):
Yeah. Oh my gosh. Well that, that's fascinating. I'm really glad that I remembered to ask that this has been so much fun hearing about everything, obviously you're working on within the industry, but uh, just all the other things we talked about really appreciate everything that you do for the industry as well. Uh, what you're building is amazing. And I think that you're really one of the pioneers that's moving forward with, uh, with, uh, one of the most interesting projects that, um, I've spoken with about someone on this podcast. So thanks again for everything you do. And, uh, thanks again for coming on the podcast.
Rolf Versluis (49:52):
Yeah. I really appreciate William. Thanks. And, and thanks for all the work that y'all do of getting the word out and uh, helping people and, um, and, and promoting these topics. So this was a, this was a lot of fun to talk with
Will Szamosszegi (50:02):
You. Yeah, of course. Is there anywhere online that people can connect with you or connect with the company?
Rolf Versluis (50:08):
So can certainly go to horizon.io, but it's not horizon O N it's horizon with ZN at the end. And, uh, that's a great place to start. We've got a very active discord, uh, and telegram, uh, every Thursday we have our team meeting and that gets live streamed on YouTube. So we've got a really good YouTube channel. And if you're at all interested, if anybody's interested in learning how to develop their own side chain software, we're putting out video series on that. The second one was just, uh, launched on, on YouTube, uh, today. And we're having, uh, because we're, we're going after developers now because we developers develop their own side chain. And so, uh, you know, come to watch some of these videos and, uh, join up for our horizon developer environment and, and other things like that. So yeah, there's, there's a lot for people to find out of every type of thing and it all firstname.lastname@example.org.
Will Szamosszegi (51:04):
All right. Perfect. Everyone. Go check out horizon Z E n.io. Thank you for listening to this episode of the SAS mining podcast. Be sure to follow us on social media and YouTube for the latest updates and previews of upcoming episodes, full episodes and transcripts can be found on SA mining.com every Thursday. If you want to hear us interview a particular guest on a future episode, please reach out to email@example.com.
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