December 5, 2022

Overview of the Internet Computer (ICP) Cryptocurrency

Overview of the Internet Computer (ICP) Cryptocurrency

</strong>

Internet Computer (hereinafter - IC) is a decentralized network of computers, using smart contracts, and the samescalable like the Internet itself. This is an innovative blockchain, the speed of which allows you to place applications of any complexity completely within the blockchain layer itself, without compromising security or decentralization.

Internet Computer develops the idea of ​​the WorldA computer with unlimited bandwidth, challenging both the centralized cloud computing services of Google Cloud and Microsoft Azure, and the leading cryptocurrencies. The founders are not limited to the goal of changing the global financial system, they want to rebuild the entire Internet and fill it with decentralized versions of Twitter, Facebook, Telegram, etc., becoming the foundation of WEB 3.0 - the next generation Internet.

Founder of Internet Computer - EntrepreneurDominic Williams. A graduate of King's College London, he has been involved in blockchain development since 2013. Inspired by Vitalik Buterin's ideas about the "world computer", he begins to put his vision into practice and in 2016 registers the non-profit organization DFINITY Foundation, which is still developing the project. DFINITY conducted a token sale and attracted venture investments. Early investors received their ICP tokens at a price of $0.03. The project has a very strong team of professionals, many of them world-class programmers.

The launch of the main public network took place in May2021. Once in the top 7 coins by market capitalization after the start of trading, the price of ICP collapsed by 90% within a month, causing frustration in the crypto community. There have been accusations of inadequate distribution of tokens among early investors. The recent bankruptcy of FTX has shed light on the exchange's targeted attack on the ICP token by launching perpetual futures contracts to undermine confidence in the ICP ecosystem and protect FTX's investment in Solana.

How the Internet Computer Works

For a detailed technical side of the project, I would recommend referring to the new White Paper - the version for geeks. In this review, I will only outline the main components.

Internet identifier (Internet Identity) isyour universal profile in the blockchain format 1234567, in which you can create multiple addresses. With the help of an identifier, you interact with applications and services and participate in management. When creating an identifier, it is tied to the device from which you do this, and with its help you confirm the addition of new devices. To restore access, you can generate a familiar seed phrase and (or) a USB key. If desired, they can be removed, changed or added again. It's easy to get confused at first, but there are many benefits. At the moment, you can use Internet Computer on any device, be it a phone with a fingerprint or a laptop with FaceID in a regular browser.

Node is a computer device connected tonetwork IC that supports the protocol. Subnet - a group of nodes forming a subnet, united by common calculations. Canisters are advanced smart contracts launched on the Subnet. They are used to store information, operate services and applications. Cycles are the compute resources that power canisters. The cost of the cycles is pegged to a basket of international currencies. Unlike Ethereum, where a commission is paid for everything with gas, in Internet Computer, a developer, having created, for example, an exchange application, puts future commissions into it using Cycles, saving the average user from having to pay anything - as when using services on the regular Internet - in it the function of cycles is performed by corporate cloud services Google, Amazon, etc.

Network Nervous System (NNS) - open sourceapplication to manage everything, the blockchain, its brain. Decisions on the development of IC are made by coin holders as a result of voting with the help of NNS. Any owner of ICP tokens can stake them for a certain period - for this period they become "neurons" with the right to vote. By voting, you get rewards. The network allows you to program your neurons to follow someone else's voice without requiring you to take any action. This is what staking looks like on the IC network. The strength of the neuron and the reward depend on the period for which the ICP token is staked.

In the Bitcoin network, miners providecomputer power to mine a new block and participate in the verification of transactions, reaching the so-called consensus on the state of the blockchain chain. Internet Computer uses another consensus mechanism - Proof of Stake, here it is called Threshold Relay and it consists of four levels. The protocols of these layers provide the highest scalability compared to other blockchains. The innovative public key Chain Key Technology provides the final transaction speed in 1-2 seconds, which is faster than Solana. DFINITY is not lying when it says that the IC is running at internet speed.

ICP tokenomics

Tokenomics is a certain economica model that balances the interests of all participants — owners of nodes, tokens, investors, users, developers, and so on. The IC ecosystem is based on 2 tokens: ICP and CYCLES. With the latter, everything is quite simple, its price is constant and tied to a basket of currencies. Cycles are needed to purchase computing resources to use smart contracts and applications.

ICP is a utility token, pricewhich is determined on the open market. ICP is a key element of the economy, its functionality can be divided into three main functions - the first two are inflationary in nature (the number of coins increases) and the third is deflationary (it decreases):

1. Network management through ICP staking and voting by the appropriate number of neurons. New ICP tokens are distributed to reward participants.

2. Infrastructure support. As a reward, ICP tokens are awarded to node holders.

3.ICP burning followed by conversion to CYCLES. The more applications and users, the more CYCLES are needed, which means more ICP will be burned and in the future smooth out the distribution effect of new ICP tokens from staking.

At the moment, the first function hascolossal pressure on the price, because many new ICP tokens are being created. This is largely due to the fact that early investors are not only able to sell some of the unlocked tokens they bought at $0.03, but they are constantly rewarded for their stake.

Advantages and disadvantages

Internet Computer boasts endlessscalability and ensures the finality of transactions in 1-2 seconds, faster than all known blockchains. The industry's lowest cost of storing information on the blockchain is $5/GB. Does not depend on cloud services. Decentralized governance entirely on the main blockchain layer. A separate DAO of developers to issue their own tokens. The above is very important for building an open access Internet.

Ability to store informationapplications or open a DAO directly on the blockchain mainnet at low cost, alleviates the chronic problems of blockchains like Ethereum or second layer solutions. The absence of bridges eliminates the risk of hacker attacks.

To interact with applications through IC, the user does not need to have a wallet or account. Most transactions are free, because developers charge canisters in cycles.

At the same time, IC is very difficult to understand, and the solution of authorization through the Internet identifier is rejected by many users and often leads to loss of access.

According to recent studies, the sector sizecloud computing, IoT, cybersecurity and AI will reach $1.24 trillion by 2026. The largest share falls on cloud computing. If Internet Computer successfully follows its roadmap and takes (offhand) at least a tiny hundredth of this particular market, its capitalization from the current $1b. will increase 12 times. However, its application is not limited to the cloud computing sector. As of mid-November, the price of the ICP token is at historical lows.

There are regulatory risks, especially incontext of the open Internet, where access is open to everyone and everything. Competing, improving and solving problems of other first-level blockchains. From the side of the project, there are also many risks. Poor tokenomics and lack of demand for the token. The risk of following the fate of EOS is to spawn thousands of unnecessary web applications without users. The lack of decentralization is that the process of launching nodes is not very democratic in IC. The concentration of a large number of tokens in NNS owned by DFINITY.

Any cryptocurrency project can depreciateor scam and IC is no exception. At the same time, unfriendly actions on the part of specific members of the crypto community, their affiliation with FTX and its subsidiaries, misinformation, and the publication of fake documents make one think about the manipulation of the ICP price and subsequent deliberate attempts to discredit the entire project. But this is also good news - they see Internet Computer as a threat to the existing status quo.

IC has one of the most active teamsdevelopers throughout the crypto industry, holding a leading position on Github. Hundreds of projects are being developed, decentralized clones of well-known services are being launched, DEXs have been launched, and the first airdrops for using applications have been announced. The number of users began to skyrocket after the launch of the SNS airdrop, a DAO for app developers. Below are analogues of Internet services developed on IC. The most popular of them are analogues of Twitter, Reddit and Telegram.

Overview of the Internet Computer (ICP) Cryptocurrency

Storage wallets

It is safer to check out the list of supported wallets on the official website https://internetcomputer.org/showcase?tag=wallet

Above, I mentioned the IC-specific InternetAn identifier that is also a wallet as such. You can create it through the decentralized web application “NNS Front-End Dapp” ​​at nns.ic0.app

If you don’t like the ID and want something a la Metamask, then I advise you to try the Plug Wallet browser extension.

Where to buy an ICP token

Given the risks of blocking for Russians, it makes senseuse more loyal exchanges where it is not necessary to go through the identity verification (KYC) procedure. Referral links to them are below. Do not forget to withdraw coins to your wallets:

okx,

Bybit,

Huobi,

Kucoin

Other exchanges where you can buy ICP but need to go through the KYC process include: Binance, Coinbase, Kraken.

Judging by reddit, difficulties often arise with ID registration, neuron staking, and automatic voting. I don’t know if it makes sense to paint it in detail, write in the comments.

Afterword.

Nothing written is expertopinion. Nothing I have written is a call / reason / signal to buy. Nothing is permanent and eternal, even if I say otherwise.