What Is Internet Computer (ICP)?
Tech Deep Dives

What Is Internet Computer (ICP)?

This time, CMC takes a deep dive into a project that aims to completely revolutionize the internet as we know it.

What Is Internet Computer (ICP)?

Table of Contents

The Internet Computer is an open-source crowd computing platform built by the DFINITY Foundation that is designed to address some of the major challenges faced today with the traditional internet of today — such as poor system security, monopolization of internet services and misuse of personal user data.
It is set out to build a modern internet capable of hosting practically any scale of application — ranging from simple smart contracts and DeFi applications to pan-industry platforms and enterprise systems. The system is theoretically capable of hosting “all of humanity's software logic and data in smart contracts.”

The project was founded and first announced in 2015, and conducted several funding rounds throughout 2018 — raising a total of $195 million. The growth and development of the Internet Computer is currently being overseen by the DFINITY Foundation, a non-profit based in Zurich, with offices in Palo Alto, San Francisco, Tokyo and remote teams globally.

Beyond this, the platform 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.

How Does the Internet Computer Work?

The Internet Computer 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. 

With 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 will be much like the internet of today. 

Unlike the traditional internet, the Internet Computer will directly host and serve applications and data on-chain, rather than relying on centralized infrastructure. At its base layer, a network of data centers can launch nodes running the ICP protocol. These nodes can then be arranged into subnetworks that are used to host software canisters that users can interact with as part of their web experience. 

As of March 2021, the platform launched its semi-public mainnet and data centers and developers are currently being onboarded. The ICP token isn't yet trading on exchanges, but several ICP futures products (known as IOUs) are trading various exchange platforms — including MXC. 

A 20-year roadmap for the project was recently 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 the computational outputs 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, data centers 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 responsible for "controlling, configuring, and managing" the network. To participate in network governance, users will need to lock up ICP tokens for a given period of time. This process creates “Neurons” which entitle the user to voting on governance proposals to help shape the network and earn governance rewards

The Internet Computer is powered by a four-layered consensus mechanism based around proof-of-stake (POS). 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 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 PSC chain technology.

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 by allocating special identities to data centers and using transferring the ICP’s governance over to the end-users. 

On one side, Ethereum uses smart contracts to automatically enforce agreements and actions. The Internet Computer, on the other hand, uses canisters; which are very similar to smart contracts, but are built to be ultra-scalable. 

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 5-10 seconds, with practically unlimited scalability thanks to the innovation of threshold relays. 

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. 
This article contains links to third-party websites or other content for information purposes only (“Third-Party Sites”). The Third-Party Sites are not under the control of CoinMarketCap, and CoinMarketCap is not responsible for the content of any Third-Party Site, including without limitation any link contained in a Third-Party Site, or any changes or updates to a Third-Party Site. CoinMarketCap is providing these links to you only as a convenience, and the inclusion of any link does not imply endorsement, approval or recommendation by CoinMarketCap of the site or any association with its operators. This article is intended to be used and must be used for informational purposes only. It is important to do your own research and analysis before making any material decisions related to any of the products or services described. This article is not intended as, and shall not be construed as, financial advice. The views and opinions expressed in this article are the author’s [company’s] own and do not necessarily reflect those of CoinMarketCap.