This time, CMC takes a deep dive into a project that aims to completely revolutionize the internet as we know it.
The Internet Computer is an open-source, decentralized blockchain-based general purpose computing platform comprising a collection of sovereign nodes maintained by independent node providers. The Internet Computer Protocol is designed to address some of the major challenges we face today with traditional internet — such as poor system security, monopolization of internet services and misuse of personal user data.
Its main goal is to accelerate blockchain singularity, where most of the world’s computation is performed by blockchain systems, providing unparalleled security and decentralization. It has set out to rebuild a decentralized internet capable of hosting practically any scale of application — ranging from simple smart contracts and DeFi applications to pan-industry platforms and enterprise systems hosted entirely on-chain. The system is theoretically capable of hosting “all of humanity's software logic and data in smart contracts.”
The project was founded by Dominic Williams in 2016, and several funding rounds were conducted throughout 2018 — raising a total of $195 million from various VC’s and seed investors including Andreessen Horowitz, Polychain Capital, Electric Capital, Multicoin Capital, and several other early Ethereum supporters. One of the major contributors to the growth and development of the Internet Computer is the DFINITY Foundation, a not-for-profit headquartered in Zurichwith offices in San Francisco, and remote teams globally. DFINITY has the largest R&D team in the blockchain space with over 200 world-renowned scientists and engineers specializing in cryptography, distributed systems, execution environments, language programing and more.
Beyond this, the platform is supported by a fast-growing ecosystem and is currently being further established by an extensive community of developers, who are able to use DFINITY’s developer resources to build and launch their own software on the Internet Computer. Currently, there are over 4000 public ICP repos, written in Rust, Azle, Python and the Internet Computer’s native programming language, Motoko.
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How Does the Internet Computer Work?
The Internet Computer blockchain is built on a novel decentralized protocol known as Internet Computer Protocol (ICP), which combines the collective computing power of a large number of computer nodes to produce a single unified computer platform capable of supporting applications of any scale and complexity.
On the Internet Computer, smart contracts are segregated into secure code units, known as "canisters," which are the computational units that function as individual applications or functions. End users are able to interact with these canisters through an entry point — and their user experience is as seamless as the internet of today. As canister smart contracts can serve HTTP requests, users can directly access the blockchain using a standard web browser, allowing Dapps to be 100% on-chain.
Unlike the traditional internet, the Internet Computer will directly host and serve applications and data on-chain, rather than relying on centralized cloud infrastructure. At its base layer, a network of independent data centers can launch nodes running the ICP protocol. These nodes are arranged into subnetworks that are used to host software canisters that users can interact with as part of their web experience.
The Internet Computer’s mainnet launched on May 10th, 2021. Since then it has seen one of the fastest growing developer ecosystems. The ICP token is available on most centralized exchanges, including Coinbase, Binance and Kraken.
A 20-year roadmap for the project was revealed by the DFINITY Foundation, below we have included a summary of its goals.
- Within five years: schools will teach about the Internet Computer and Motoko (its programming language). Some open internet services will have achieved substantial success and there will be widespread understanding of what the ICP is.
- Within 10 years: The internet computer will be on a path to overtake big tech's closed proprietary internet ecosystem; funds will continue to be redirected to the ICP from legacy internet companies; and DeFi will be on par with traditional financial technology.
- Within 20 years: The ICP will be bigger than the closed internet of today. Most of society's crucial infrastructure will be hosted on it and individuals the world over will benefit from massively improved privacy and personal freedoms.
What Makes the Internet Computer Unique?
Unlike on competing platforms, the end user does not pay for computationor storage of smart contracts (or canisters) on the Internet Computer. These canisters are pre-charged with "cycles'' and instead pay for their own computations through something of a "reverse-gas" model.
This has several benefits. For one, users don't have to own any cryptocurrencies to interact with the ICP — eliminating a significant barrier to entry. Users also don't even need to know that the service they are interacting with is based on decentralized technologies, making the process a seamless experience to what they are accustomed to today.
Instead, independent node providers receive remuneration for their services in the form of ICP tokens. Some of these tokens are used to charge canisters with cycles. As the computational resource of the Internet Computer, cycles are gradually depleted with the use of each canister, and must be regularly replenished. The cost of each cycle will be set by the network’s governance system, and should tend towards a stable value over time.
This governance system, known as the Network Nervous System (NNS) was first revealed by the DFINITY Foundation in September 2020. The NNS is one of the largest DAOs, with over $1B locked, and is responsible for controlling, configuring, and managing the network without the need for cumbersome forks. To participate in network governance, users need to lock up ICP tokens for a given period of time. Users who lock ICP tokens in the NNS earn rewards for voting on proposals that update the network.
The Internet Computer is powered by a novel four-layered consensus mechanism. It consists of an identity layer, a random beacon layer, a blockchain layer and a notary layer. Together, these layers enable provable security and resistance to known attack vectors (like Sybil and 51% attacks) while maintaining decentralization and ensuring the network can scale to support millions of participants.
The Internet Computer project is being worked on by one of the most extensive R&D teams in the crypto space, or to directly quote DFINITY, it is being built by the "industry's most distinguished team of distributed computing engineers, cryptographers and operational experts." Its development is led by DFINITY founder and chief scientist Dominic Williams — an experienced entrepreneur and crypto theoretician who pioneered DFINITY's threshold relay and chain-key cryptography.
How Does the Internet Computer Compare With Ethereum?
Unlike Ethereum, which looks to provide the technology stack for decentralized applications (dApps) primarily concerned with moving and using digital assets (like ETH and ERC-20 tokens), the Internet Computer is tasked with replacing the traditional internet through smart contracts that serve web, host large amounts of data, directly sign cross-chain transactions without bridges.
Currently, Ethereum relies on bridges to wrap tokens in order to support cross-chain DeFi. Building on chain-key cryptography and threshold ECDSA, the Internet Computer has the ability to securely sign native transactions on other blockchains such as Bitcoin or Ethereum.
On the one hand , Ethereum uses smart contracts to automatically enforce agreements and actions. The Internet Computer, on the other hand, uses canisters; which are enhanced smart contracts built to be web-serving, affordable and ultra-scalable. One other difference is that a significant percentage of Ethereum’s nodes are running on centralized cloud providers, while the Internet Computer has a completely sovereign network of nodes that do not rely on Big Tech’s cloud infrastructure.
While both blockchains have DAOs that allow participants who hold governance tokens to vote on proposals, Ethereum’s DAO governance is currently limited in its functionality. As Dapps built on ICP can be fully on-chain, DAOs for the first time can control all of the application without any centralized components.
Beyond this, the two platforms differ considerably in their speed and efficiency. While Ethereum currently suffers from relatively high transaction fees and slow transaction confirmation times (largely due to congestion), the Internet Computer's massive throughput ensures it is able to achieve absolute transaction finality in 1-2 seconds, with practically unlimited scalability thanks to the innovation of threshold relays.
Due to its efficiency, the Internet Computer can also store data on-chain for orders of magnitude cheaper than Ethereum. It costs 12,643.75 ETH to store 1GB of data on Ethereum, which translates to $22.2m with today’s prices. The same 1GB costs $5 per year on the Internet Computer and doesn’t fluctuate with ICP’s price.
Internet Computer (ICP) Outlook
With that in mind, these performance advantages are seen when comparing the Internet Computer to the current state of Ethereum. With the gradual roll-out of Ethereum 2.0, these differences could change considerably.
ICP made a huge splash when it launched in May 2021, hitting an all-time high of $750 and ascending to fourth in crypto market cap rankings, which generated further interest from speculators and traders. However, as seen on the ICP chart on CoinMarketCap, ICP price has suffered from huge selling pressure and a drawdown of almost 98% from its ATH. However, with retail interest in ICP still at a considerable level, likely due to strong project fundamentals, notable backers and contributors to the project and high number of github commits, leading top crypto exchanges like Kraken to list ICP in March 2022.
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