The Internet Computer isn’t a computer. Instead, it’s a cryptocurrency that suddenly became popular in May 2021. Before long, the Internet Computer (ICP) became one of the biggest cryptocurrencies by market cap.
While the 2022 bear market has wiped off much of its value, the ICP cryptocurrency is still one of the largest tokens in the crypto ecosystem.
However, the special thing about the Internet Computer is that it isn’t just like every other crypto. It’s quite different, and there aren’t many tokens that offer the same utility. Perhaps that’s why it was able to catapult itself to popularity and acceptance so quickly.
What Is the Internet Computer?
Unlike other crypto-assets like Bitcoin and Ethereum, ICP isn’t just a currency. While the token can be traded on exchanges like Coinbase, the token’s goal is much bigger.
The ICP is a digital token that users can use to create websites, apps, and other web-based services. The Dfinity Foundation created the currency, and it’s backed by entities like Polychain capital and investors like Andreessen Horowitz.
The Dfinity Foundation is a nonprofit organization focused on building the Internet Computer. Hence, the only goal of the organization was to create the ICP. In 2018, Dfinity raised $102 million in a crypto token sale. The brain behind Dfinity is Dominic Williams, and he started working on the Internet Computer project in 2016. In May 2021, the organization successfully introduced the ICP to the world.
The token lives on a special blockchain that allows users to deploy safe canisters, essentially improved smart contracts.
It is hosted on node machines operated by independent entities in different parts of the world. This blockchain is run through a cryptographic fault-tolerant protocol that ensures the chain cannot be broken or hacked. It’s also composed of individual subnet chains that run in parallel and communicate with one another through chain key cryptography.
The chain is controlled by a permissionless governance system called the Network Nervous System (NNS). The NNS is the mechanism that makes decisions on updating node machines, configuring parameters, and creating new subnet blockchains. Additionally, the NNS is open, meaning anyone can submit proposals or vote on new updates. However, users who want to interact with the NNS must stake ICP tokens and create a neuron with the NNS first.
In short, the ICP is a set of frameworks that connect independent data centers and allow them to offer decentralized services to web users. The data centers are of top quality and can run every application currently accessible through the internet.
The ICP blockchain is crypto’s answer to the centralized cloud-based services currently in use. In other words, the ICP is Web 3.0’s AWS (Amazon Web Services).
So, How Does the Internet Computer Protocol Work?
The Internet Computer Protocol exists to solve one problem: the centralization of internet infrastructure. The biggest applications in the world today exist on centralized systems. This presents two major challenges.
The first challenge is that the centralization of this data makes it liable to attack. What if a criminal group attacks and gains control of this data bank? And if a critical part of this data infrastructure is hacked, it can affect the entire application and cause it to go offline.
The second major challenge is that centralized servers provide many censorship opportunities. These servers can de-platform applications and even de-platform people indirectly.
The ICP solves these problems by running a decentralized system. So instead of running a dedicated server in Amazon Web Services, data could move across independently owned data services across the work.
In essence, the ICP is a new framework that allows users to host their servers in a decentralized manner.
The ICP’s Advantages
According to the ICP Devs, the decentralized computer network on the blockchain has a lot of advantages over centralized cloud-based alternatives.
The first is that the network has open standards and doesn’t have to negotiate conflicts of interest. Cloud-based web services may have to deal with conflicts of interest when they host services that compete with their business.
For example, companies competing with Amazon may be unwilling to host their businesses on AWS, which could come at a high cost if AWS provides the best web services. The Internet Computer Protocol solves such problems without conflicts of interest.
The protocol essentially provides three important services. The first is a globally accessible blockchain that runs smart contracts and can also provide interactive web data to users.
The second service is a network of blockchains connected through chain key cryptography. The third service is the clear independence of the protocol. This independence ensures that smart contracts will always be executed.
Bottlenecks of the Internet Computer Protocol
If the ICP sounds too good to be true, that’s because it probably is. Using a server on the ICP isn’t just as simple as clicking through your phone and buying a server.
Users who want to participate in the ICP must obtain special heavy-duty computers. This goes against the ethos of decentralization, which supports more inclusion, not less. Since the hardware requirements to use the ICP are large, only prominent institutional players may benefit.
Another big problem is abuse. In a decentralized system, who has the responsibility of stopping abusive content? Centralized cloud services like Amazon and Google take moderation responsibilities very seriously. Such responsibilities would not exist with ICP, which means that there are no barriers to what can be hosted.
Thankfully, this isn’t an insurmountable problem. ICP is a governance token, meaning that community members can stake their tokens and self-regulate their community.
Why You Should Care
The ICP could change the way we relate to the internet. That’s why it’s important to understand how it works and what it does.