Internet Computer ICP
Explaining the Internet Computer (ICP)
Internet Computer (ICP) refers to a blockchain-based protocol designed with one purpose in mind – to build a new Internet. Founded and launched by the Swiss-based Dfinity organisation, it presents a web speed blockchain with unconstrained capacities.
Its main aim is to revolutionise the manner in which we build tokenized internet services, decentralised finance (DeFi) and deploy applications on the internet, along with reimagining traditional systems as well.
Internet computer wants to become a ‘Cloud 3.0’ platform to host decentralised applications (Dapps) on a distributed network as being more secure, reliable and low-cost than traditional cloud computing platforms.
The Internet Computer network is powered by its native token ICP. The ICP token presents a native utility token that is used to facilitate the network's governance and reward network participants.
With its ability to enhance scalability and host Dapps, this project soon became a fundamental alternative to many platforms. Direct integration with blockchain technology provides a more secure option compared with the traditional IT infrastructure.
An alternative to centralised cloud platforms
As an alternative to traditional cloud computing services, Internet Computer wants to bring to the table independent data centres. To completely remove centralisation, people worldwide would be enabled to start their own data centres and allow users to host their websites and applications.
The crypto world revolves around decentralisation. To understand why it is such an important term, check out this article: 'What is decentralisation & why is it important?'.
For example, instead of running on a dedicated server in Google Cloud, the software would have no fixed physical address, moving between servers owned by independent data centres around the globe. In other words, popular cloud services and applications are often closed-source, proprietary and hosted on a handful of data centres owned by big tech firms.
Corporate cloud services are associated with a few drawbacks such as privacy issues, security pain points, high fees and censorship. The Internet Computer platform aims to provide these services in a decentralised manner and to incentivise transparent and open-source software development.
A gateway to Web3
The Internet Computer blockchain opens the door for Web3 platforms, enabling them to leverage its technology for the purpose of resolving privacy matters typically found on traditional social networks.
It is a well-known fact that traditional platforms have their share of affairs when it comes to data protection; it ranges from sharing sensitive personal information with corporations to burdening users with advertising.
However, the Internet Computer blockchain assumed the role of a world computer that is competent to host even complex Web3 services. Users are enabled to cryptographically log in to these services, store and share files, along with transferring cryptocurrencies and NFTs using only chat messages.
History behind the Internet Computer blockchain
This crypto project was founded back in 2016 by Dominic Williams, a member of the Bitcoin and Ethereum early tech communities and founder of a MMO game known as Fight My Monster. The serial entrepreneur has founded several start-ups before creating Dfinity.
The Dfinity Foundation was created in Switzerland to scale-up the project’s research and development efforts. The foundation raised funding through a public ICO in the beginning of 2017. After several rounds of funding in 2018, the project managed to raise more than $150 million from a number of investors.
In 2021, the Dfinity Foundation launched the alpha mainnet of the Internet Computer, enabling early users engaging in ICP token’s airdrops could freely trade tokens on the open market. Additionally, its source code was released into the public domain, enabling many developers to build on-top of the network.
A community-driven governance
Following the event of the Internet Computer becoming a public blockchain, the governance reins were put in the hands of the wider community which controls approximately 60% of the voting power. On the other hand, it has been stated that the Dfinity Foundation and the Internet Computer Association shall never collectively hold more than 50% of the voting power.
ICP token holders stake tokens for the purpose of creating so-called neurons within the Network Nervous System (NNS) which refers to a permissionless governance system that oversees the operation of the Internet Computer network. By staking, ICP token holders can participate in network governance and vote on proposals. Once a proposal has been adopted, it is automatically executed by the NNS.
Simply put, governance of the IC platform is accomplished through the Network Nervous System (NNS) which assumes the role of a tokenized decentralised autonomous organisation (DAO). As a DAO, it is responsible for managing network upgrades, the ICP tokens' supply, and rewarding network participants.
So how are neurons linked to a user’s voting power? The voting power of a neuron is calculated on the ground of three features such as the number of ICP tokens staked; the duration of the dissolve delay, and the neuron’s age.
Why is the Internet Computer protocol relevant?
The Internet Computer project has positioned itself on the cryptocurrency market as the third iteration of blockchain technology, alongside established cryptos such as Bitcoin and Ethereum. It all started with Bitcoin and the birth of cryptocurrency as the digital gold back in 2009; Ethereum, as the second iteration, gave rise to the smart contract technology and the DeFi movement. The team behind Internet Computer says that their project is the third iteration because it is reimagining the structures everything is built on.
While this sounds as a pretty bold statement, the Internet Computer project did bring to the table a few innovations. Alongside inventions such as the Network Nervous System (NNS) and the Chain Key technology, this crypto project came with promises to become a novel form of global computing encompassing traits such as security, scalability, and speed.
Basically, the Internet Computer project is relevant due to enabling developers to build services and applications that do not rely on traditional structures such as centralised servers. Some of the services that can be created on the Internet Computer platform involve distributed storage networks, digital identity solutions, content delivery networks, AI services and data feeds.
What are the downsides of Internet Computer?
The Internet Computer Protocol is not without faults. Even though the team branded the project as a revolutionising third iteration of blockchain technology, there are a few challenges it needs to overcome. Let's take a look.
Centralisation worries
Despite its decentralised governance structure, there have been particular concerns within the crypto community regarding the concentration of voting power among a few broad token holders. While Internet Computer claims that big token holders shall never have more power than the community, a part of the community thinks that the project didn’t meet entirely the ethos of decentralisation.
Limitations of the ecosystem
If we compare Internet Computer with established blockchains such as Ethereum in terms of Total Value Locked (TVL), the number of Dapps and active addresses, its development ecosystem seems to be relatively smaller and more limited as well.
While it still has a lot of room to grow, this amounts to a narrower number of available tools, community support and libraries in comparison to bigger blockchains.
Severe allegations - is Internet Computer a scam?
Despite all the praises received, severe allegations appeared within the crypto community. In fact, Internet Computer has been accused of being a scam, and for any crypto project, that means really bad publicity.
The story goes like this – The Dfinity Foundation launched ICP, the project’s native cryptocurrency in 2021. The launch created a wave of hype and the token gained momentum. ICP became the third largest cryptocurrency by market capitalization, standing right behind Bitcoin and Ethereum.
However, the hype vanished, and the token lost 95% of its value in the following weeks. Even though volatility is associated with the crypto space, the massive drop raised a few eyebrows.
The Foundation wasn’t accused for the massive drop, yet for the assertion that the native token lacked the decentralised promises and that it barred token holders from accessing their digital assets. Allegedly, at the time of launch, there was no clear breakdown of token allocation, along with a 24-month long dissolve delay in claiming the token, but with no information how to access them.
A part of the crypto community claimed that the project was engaging in rug pulling and insider trading as well. A report by Arkham claimed that the Foundation had enabled the treasury and insiders to send 18.9 million ICP tokens to exchanges and the appearance of 44 insider addresses that deposited 10 million ICP tokens worth over $2 billion at the time to exchanges as well. All this allegedly happened when token holders weren’t allowed to access their assets.
All these allegations turned into class act lawsuits in the United States. Ranging from a lack of transparency over securities fraud to insider trading, the US subsidiary of the Foundation got sued by a bunch of investors. Whether Dfinity is guilty or not, it is yet to be seen.
How does the Internet Computer Protocol work?
It is a well-known fact that the contemporary state of the Internet is highly centralised. Being hosted on a handful of data centres owned by corporations, it is susceptible to security failures and privacy violations. The Internet Computer came up with an idea to provide a decentralised alternative that should be more secure and transparent.
The Internet Computer protocol enables computers to connect to each other and share data without the need for a central server. As independent data centres, it utilises a decentralised network of nodes. These nodes are independent computers that store data and transfer it to each other.
The project facilitates a new consensus protocol in which several machines need to agree on which inputs to process and in which order. Basically, several machines worldwide run a piece of software each, and collectively they define the software’s current state.
To understand more about how the Internet Computer works, let’s examine its main components.
Chain key technology
Chain Key cryptography refers to a novel manner of conducting secure digital transactions with fast transaction speeds. Its functioning is based on a decentralised network of computers known as canisters. The Chain Key technology also utilises a peer-to-peer architecture that enables users to anonymously connect to each other and transfer data.
The Chain Key cryptography provides a combination of canisters, cryptography and consensus algorithms to conduct digital transactions in an efficient manner. Data is stored in the form of canisters that include secure containers with encrypted information. Being secured by cryptographic algorithms, canisters prevent third parties from accessing the data.
When interactive web content is running inside a browser it validates the chain key signatures on content and responses served by canister smart contracts hosted by the Internet Computer protocol. Canister smart contracts are software actors, composed of the WebAssembly bytecode and consistent memory pages that it runs within. This enables multiple smart contracts to run in a parallel manner on a single subnet.
Motoko programming language
Motoko presents the latest programming language for Internet computers. It refers to a novel language developed specifically for this project. Basically, Motoko was designed to make it more simple for developers to create and deploy applications on the internet Computer network.
According to the team behind Internet Computer, Motoko provides a number of developer productivity features such as garbage collection, arbitrary precision arithmetic and subtyping. However, it is not the only programming language available for implementing canister smart contracts. The system offers a canister development kit for the Rust programming language as well.
The Network Nervous System (NNS)
We have already mentioned this DAO governing the network. Let’s explain it a bit more – the NNS refers to an open algorithmic governance of the network. Its most important features include the ability to upgrade the Internet Computer Protocol, onboard new node providers, create new subnet blockchains and add node machines into the blockchain.
As explained above in the text, any user is enabled to participate in this system by staking ICP tokens into one or more neurons. Neurons submit proposals and decide whether to adopt or reject them. The NNS also includes the so-called liquid democracy – neurons may delegate voting power to other neurons.
The ICP token
Previously known as the DFN token, the Internet Computer Protocol (ICP) token is the native cryptocurrency of the network and the main piece of decentralised governance. It is directly associated with the Network Nervous System (NNS).
The ICP token has three main functions. Primarily, ICP tokens provide governance rights to token holders enabling them to vote on proposal and protocol upgrades through the NNS. Users can also earn ICP tokens for participating in the process of voting.
Secondly, users that want to vote need to lock up their tokens first and go through the lock-up period ranging from 6 months to 8 years. Users who lock up their ICP tokens for longer periods get more voting power. ICP tokens also serve as a reward to network participants for their honest conduct.
Finally, ICP tokens are used to pay for canister gas fees on the platform. Tokens are converted into cycles which can be used to get more computing power, along with enhancing the running of websites and applications. In other words, you can think of ICP as a way of converting crypto into processing power as the network establishes a fee based on the amount of computing power required by a certain project.
Maximum supply, circulating supply, current market price and market cap
Internet Computer has a circulating supply of 448.17 million ICP tokens out of a total supply of 488.51 million. Its tokenomics rely on both inflationary and deflationary forces on the crypto market.
As mentioned in the text, within a week of the mainnet launch, the project managed to rack up a broad market cap of $71.8 billion only to subside to $4.8 billion in a few weeks.
The current price of the ICP token stands at $4.144. Its 24-hour trading volume amounts to $80.96 million and a market capitalization of $1.83 billion.
Market sentiment and price predictions
The crypto market is known for its volatility and the current price of ICP tokens may not reflect its minimum or maximum price in the future. Market fluctuations can lead to significant variations in the average price level, making it challenging to predict the future performance of the token accurately.
When it comes to Internet Computer price predictions, various factors can impact the token's value such as the adoption of the protocol by developers and businesses, technological improvements and market sentiment towards cryptocurrencies in general.
At the time of writing, Internet Computer has scored a bullish rating when it comes to the market sentiment score. This score measures the performance of a token in a short period of time. As for ICP price predictions, the token is expected to range between a low of $2.7 and a high of $6.8 by the end of 2023. It could reach a higher price at the end of 2024 if it implements some key developments such as Bitcoin integration and in-house performance tuning.
Keep in mind that any Internet Computer price prediction should be taken with a grain of salt and used solely as a reference point rather than a definitive statement; you still have to do your own research.
The future of the Internet Computer (ICP)
The years to come will show whether the Internet Computer (ICT) has the potential to revolutionise the manner in which we interact with software. With its innovative features, it has a shot at creating a novel decentralised internet.
However, the Internet Computer had its share of affairs which left a big stain on the project’s reputation. Additionally, its future depends on its capability to obtain traction in the public internet and establish itself as a reliable platform for a new infrastructure.