What is Internet Computer (ICP)?
Though its origins can be traced back to 2015, Internet Computer’s blockchain genesis was in May 2021, when it became part of the public internet. It is a general-purpose blockchain that hosts canister smart contracts – essentially creating a huge global computer. Its developers envision it replacing traditional IT like centralised servers or cloud computing services.
Notably, Internet Computer can communicate with many other blockchains, removing the need for bridges and wrapping – which are practices that often cause vulnerabilities. It also provides the ability to create an internet identity and offers Dapps that don’t require fees or tokens to use.
The native cryptocurrency of Internet Computer is ICP, which can be staked in order to participate in the system’s governance.
Internet Computer (ICP) Basics
Internet Computer Blockchain
According to its developers, Internet Computer is the largest ongoing research and development effort in the crypto space. It leverages novel chain key cryptography to enable multiple subnet blockchains to be combined into one – thus enabling efficient, limitless horizontal scaling.
Thanks to chain key cryptography protocols, smart contracts hosted on Internet Computer can interact with other blockchains without needing bridges or wrapping. Unusually, the canister smart contracts running on Internet Computer effectively pay their own gas fees – via pre-charging in cycles (also known as “reverse gas”).
An advanced DAO (decentralised autonomous organisation), called Network Nervous System, is hosted within Internet Computer’s protocols. This is designed to allow the community to govern the network and enable upgrades without the need for forks.
ICP holders can stake their tokens to participate in the Network Nervous System and vote on organisational decisions. Users can either stake directly, or delegate their tokens to other voters. In order to qualify for voting, ICP must be staked for at least six months and held in a special account called a ‘neuron.’
Node operators and users staking ICP are rewarded with newly minted tokens, based on a formula that takes into account the volume and duration of stakes.
There is no fixed supply limit of ICP tokens, although the total circulating supply is controlled by several mechanism, including burning, to balance inflationary and deflationary pressures.
Internet Computer (ICP) Adoption & Usability
Internet Computer’s scalability, reverse gas fee model and Internet Identity (more on the latter two in a moment) make it a good protocol on which to build Web3 dapps. It has already been adopted by projects covering a range of uses, including:
In terms of the ICP token itself, it is primarily used for governance and fees within the Internet Computer ecosystem. Even so, at the time of writing in early December 2022, it was the world’s 39th biggest crypto by market capitalization, at just over $1.15 billion (CoinGecko data).
Internet Computer (ICP) Fees & Speed
Unlike other crypto projects, Internet Computer uses a ‘reverse gas’ model, meaning developers can build absolutely free-to-use dapps – so users don’t need tokens or wallets. Internet Computer is exceptionally fast, being able to process 11,500 transactions per second, and delivering finality within 1 second.
Internet Computer Security and Safety
One of the main innovations of the Internet Computer is Internet Identity – this enables users to maintain anonymity without needing usernames or passwords, by harnessing fingerprint of FaceID systems on mobile or portable HSM devices like Ledger wallet or YubiKey. It also prevents users from being tracked during their use of dapps. This makes ICP one of the most secure blockchain projects in terms of protecting user identities.
Security and safety tips:
- Don’t leave your ICP on-exchange for longer than absolutely necessary. If you are not currently trading, transfer them to a local wallet for short-term storage or staking.
- For long-term storage or staking, keep your crypto in a hardware wallet.
- Always keep your wallet keys in multiple safe places – they cannot be recovered.
- Never tell anyone about your crypto holdings. No matter how secure your storage is, if you or your loved ones are physically threatened, you’ll probably hand over your personal keys.
Unfortunately, ICP has seen one of the most dramatic price drops of any cryptocurrency, plummeting from over $700 at launch on 10 May 2021 to just over $30 by late June of the same year. At the time of writing, in early December 2022, ICP was trading at just over $4.50 (CoinGecko data).
Final Word on Internet Computer (ICP)
In terms of technology, Internet Computer is compelling, and the project’s ambitions are nothing short of monumental. However, in terms of ICP token as a cryptocurrency – its success is entirely dependent on Internet Computer gaining enough traction to reach its goals. And, it is unclear if this is realistic. Certainly, if ICP’s token price is anything to go by, the project needs to generate far more enthusiasm and participation to be sustainable.