Crypto’s largest launch
Internet Computer Coin – The number of crypto projects on Coinmarketcap has increased by one. How did The Internet Computer suddenly jump among the top 20?
Cryptocurrencies aren’t really decentralized, are they? We use today’s internet because it is controlled by a handful of tech giants that use it to host storage, compute, and host front-end user interfaces to interact with.
This could trigger a collapse of the crypto market in a matter of hours if these companies agree not to use their services. Creating a decentralized Internet can solve the problem of scent realization via the Internet Computer.
In the past few days, its ICP token appeared among the top 10 largest cryptocurrency rivals by market capitalization, leading many to wonder what this project actually represents and if it has any potential. Hopefully, I will find out today.
What is The Internet Computer Coin?
A bit confusing is the history of The Internet Computer, but here is a general overview. In either 2014, 2015, or 2016, Dominic Williams founded the internet computer. His experience in cryptography has spanned over 20 years, and he has been active in the field since 2014.
A world computer based on Ethereum’s idea was to be The Internet Computer and at the time, it was known as Dfinity.
In contrast to other smart contract cryptocurrencies, the Internet Computer has a centralized network of nodes. Not only will the Internet Computer replace the application layer, but also the complete internet stack.
Dfinity Foundation Inc., a Swiss non-profit corporation founded in 2017, is maintaining and working on The Internet Computer, like many crypto projects.
Nearly 200 of the world’s top developers and researchers have been working collectively since 2016 on developing The Internet Computer protocol at The Dfinity Foundation.
VC investors and the ICP ICO provided Dfinity Foundation with the capital necessary to fund this massive project. This public A total of 120 to 166 million dollars have been raised in public and private funding rounds. I’ll update you later.
This crypto project, unlike many others, is not completely open-source. In my understanding, open-source developers are also prohibited from copying most of the code.
Participants will need to use standard hardware provided by Dfinity Foundation to participate in The Internet Computer blockchain.
With the release of Copper (SDK & Motoko) in 2019, The Internet Computer began to develop smart contracts written in a new language called Motoko, which was formed to develop The Internet Computer.
The Internet Computer will feature the Bronze milestone, the first functional decentralized application, at the World Economic Forum’s Davos Summit in early 2020.
Here’s an open-source version of LinkedIn called LinkedUp built entirely on The Internet Computer. It works just as fast as its centralized contemporary.
The Internet Computer was opened to third-party developers a few months later, highlighting Dfinity’s capabilities. It is a Tik-Tok clone of only 1000 lines of code, Can-Can.
Sodium, The Internet Computers government’s framework, and tokenomics were introduced by The Dfinity Foundation at the end of 2020.
The Internet Computers launched its mainnet earlier this month after completing the final stage of its development, Mercury.
A high enough valuation placed ICP among the top 10 largest cryptocurrencies by market cap by being traded on multiple exchanges such as Coinbase and Binance. What the hell is up with that?
In what Way Does It Work?
There might not be a more complex cryptocurrency project than the Internet Computer. Consequently, if you don’t quite understand what I am about to say. I don’t want you to take it personally, so don’t.
The Internet Computer can be seen from the perspective of a network of data centers scattered across the globe. The nodes within each data center are grouped together into something called a Subnet, as are the nodes from several data centers.
It uses a novel consensus mechanism invented by founder Dominic Williams called Threshold Relay to construct a Proof of Stake (PoS) blockchain.
A threshold relay is outside the scope of this post, but in essence, a subset of nodes in each subnet is selected to produce each block according to their staked ICPs. Polkadot and Kusama have subnets similar to those on Polkadot.
In the same way as parachains, subnets are used by The Internet Computer to host decentralized applications. The Internet Computer canisters are similar to what regular crypto DApps are composed of, which are smart contracts.
Like smart contracts on steroids, canisters are like smart contracts. Developing dApps can be leveraged if it is possible to use these versions automatically to support additional users on other subnets. A subnet consists of a small number of nodes hosted in large data centers, which provides superior performance. Transactions and applications both run at rates comparable to regular internet browsing.
Additionally, canister-based applications do not charge any fees to the user. You should not use this unless you’re using something like a decentralized lending protocol or exchange.
The fact that you have to pay a network fee for every interaction on just about every other smart contract blockchain in existence is in stark contrast. Just a moment ago, I explained how it’s possible.
Among other differences, The Internet Computer requires that you hold some kind of internet identity in order to use its applications.
You can pair your phone computer or secure USB key with this internet identity. Creating an internet identity generates an address for your wallet.
Devices originally used to create online identities become the ones used to maintain them, verify all Transactions, and the addition of new devices to the same identity is required.
If you have another cryptocurrency, you can just generate a wallet address and record your seed phrase so you’ll be able to retrieve it again.
The Network Nervous System
A node, a subnet, a canister, and a user in Internet Computers data centers are managed by the NNS or the Network Nervous System. The NNS lets The Internet Computers Network know which data centers get to join.
Depending on how they behave or perform, NNS nodes can be removed from subnets if they are misbehaving or underperforming.
In subnets, the NNS provides information on which nodes make up a subnet as well as the keys that are necessary for it. It is outside the scope of this post to discuss subnet keys, which are a crucial component of the chain key technology used by Internet Computers.
Chain Key technology enables subnets to communicate with each other through a single NNS which supports all transactions, thus validating the transactions between them.
If a Canister Software or management service upgrade is allowed or not, the NNS decides at this level.
Users can make changes to ICP token economics by contacting their NNS.
However, what’s interesting is that the NNS itself is made up of several canisters that are assigned to a dedicated subnet. Data center nodes and subnets are tracked in the Registry Canister.
A second canister holds the Ledger Canister, which records all transactions and tokens on The Internet Computer as well as all internet identities.
Lastly, there is the Governance Canister, a place for ICP holders to vote on all the changes I mentioned just now to the Internet Computer.
However, I will not be able to discuss NNS governance in greater detail, but the most important point is that the longer your ICP is locked, the more likely you will be to get votes.
Further, you earn ICP when you vote on NNS proposals, which leads me to the tokenomics of ICP.
ICP Coin Tokenomics: ICP
Almost 470 million ICP tokens were initially available. The annual inflation rate for ICP starts at 10% and decreases to 5% over time. There is no maximum supply for ICP.
The public sale of ICPs for 4.1 million dollars, which works out to about 3.5 cents per ICP, sold almost a quarter of ICP’s initial supply.
In an interview, Dominic Williams pointed out that most of the participants were members of the Ethereum community, according to a presentation by Dominic Williams.
The first private sale in 2018 involved roughly 7% of ICP’s initial supply, and it was priced at 63 cents per unit.
In 2018, those involved in the second private sale paid 4,5 dollars for each ICP, which was very high.
In total, 5% of the ICP supply was allocated to Dfinity Foundation and its affiliates, and less than 1% went to participating Coinlist users.
KYC and the creation of an internet identity were mandatory for everyone who received or purchased ICP tokens. I believe that the ICP tokens allocated to participate in the public seed sale of 2017 are the only ones subject to a vesting schedule.
Those perks will gradually be unlocked monthly over a period of four years. As part of this transition period, NNS canisters will be used as governance canisters and can be voted with.
ICP COIN Tokenomics: Use Cases
There are three uses for ICP tokens:
Internet Computer is under the direction of the NNS.
Using the Internet Computer, you must pay fees for running apps and websites.
The Internet Computer should be rewarded voters for their participation in governance and data centers for performing computations for the computer’s operational maintenance.
Tokens for ICP are locked in the NNS for voting on proposals. A lockup period of 6 months is the minimum, and a maximum of 8 years is the maximum.
Cycles must be converted into ICP tokens to pay for canister fees. Let’s get back to the complicated part, so please bear with me.
1 $DR (SDR) can be converted into 1 trillion cycles per ICP token. Now, for those unfamiliar with $DR, it is basically a currency issued by the IMF backed by a basket of fiat currencies.
As a simple rule, let’s say that the $DR is equal to one dollar. If you have one ICP and it is currently being sold for $100, you would get 100 trillion cycles if you converted 1 ICP into cycles.
Nowadays, developers and software companies run canisters, which are usually paid for by the people who run these canisters, rather than by just users.
To put it another way, anyone building applications or websites for The Internet Computer must purchase ICP in cycles, convert them into cycles, and pay the canister fees in order for their applications to continue to run.
By having the cycle conversion pegged to the $DR, developers can always predict how much power will be consumed. The Internet Computer will be able to trade cycles on decentralized exchanges and possibly even be used as a digital currency by extension.
In theory, ICP could theoretically become a deflationary currency if enough applications are deployed on The Internet Computer to pay for canister fees.
Additionally, the burning mechanism helps maintain cycles in a 1 billion dollar peg to a trillion-dollar cycle. There is a caveat here: Originally, ICP cycles cannot be returned to ICP once they have been minted.
Participating in governance on the network allows users to receive incentive payments proportional to their stake amount and how many votes they cast. They can claim the voting rewards once per month, and they can access them one day after they are unlocked.
Inflationary rewards also accrue to data centers which provide node services, even though nodes participating in consensus on the subnet do not have block rewards Cryptocurrencies.
The reward they receive is instead a quote standard monthly reward based on their region. The question now is, how will all of this affect the price of ICP?
ICP Coin Price Analysis
ICP reached a price of over 640 dollars on its first day of trading. In the price pattern that followed, we saw a sudden drop, a sudden jump, and another drop, which was typical of newly listed cryptocurrencies.
As ICP has been losing money over time, it took a hefty hit when the crypto market suffered a flash crash recently.
While most cryptocurrencies have experienced a drop in price, ICP has shown a longer-term downward trend which I believe will continue for a while. Due to the fact that there appears to be a greater amount of sell pressure than buy pressure on the ICP token, this is the reason.
In the ICP public sale, those who participated are currently in 5,000x profit territory, and I expect they’re allowed to collect their monthly rewards, or at least to claim their vested tokens.
There is no apparent vesting period for participants in ICP’s first private sale, which earned 200x profits. Nearly 40x have been accumulated by participants in the later airdrop and sale.
As mentioned above, participating data centers will earn ICP with their nodes, which they will sell to cover operating costs. Even though the Internet Computer has 88 nodes running in 16 data centers, we do not seem to be receiving very generous node rewards.
It would be ironically good, if ICP’s price actions were true. These parties only sell a fraction of the ICP circulating in the market, but they are selling a lot more of it than what is currently needed.
The Internet Computer doesn’t require users to have an ICP or to have cycles. If not for the requirement that you lock that ICP up for at least six months, one might argue that governance rewards would incentivize someone to buy ICP.
A bear market that may end in six months or less is not ideal, especially when we’re in one. And that’s not all. The NNS is only likely to reward larger investors since most ICPs are held by large investors, so the voting rewards given to an average retailer would be very small.
Moreover, there appears to be no need for data centers to hold significant amounts of ICP. In comparison with Filecoin (FIL), To accommodate your network, storage miners require tons of FIL coins.
Beyond basic speculation, the only driver of the ICP market is the demand from app creators needing cycles to power their apps. When you consider the fact that there is no clear monetization structure, it is not surprising that few developers build applications on The Internet Computer.
The fact that developers are paying transaction fees for DApps built on Ethereum and Binance Smart Chain may be irritating, but it serves to motivate them to develop. In any case, Dfinity Foundation isn’t deterred by ICP’s weak price action.
Internet Computer Roadmap
Dominic Williams wrote the longest blog post in my memory in January of this year, detailing a 20-year roadmap for the project.
It will also focus on adopting The Internet Computer protocol over the next five years, and it hopes to double its staff. The Internet Computer, a product of the Dfinity Foundation, could be a viable replacement to the traditional internet in ten years.
The Internet Computer is predicted to be bigger than the internet today by 2040 and tech giants, like Amazon and Google, will become extinct.
Getting this done on computers is only half of the battle. That is why Dfinity Foundation recently unveiled its Endorphin operating system, the first of its kind for smartphones.
Endorphin phones will work just like websites, including all apps and features. Those apps are nothing more than bookmarks for those websites that we see on our smartphones today.
Throughout the web, apps, and DApps will be treated the same. There will simply be a transparent caching of content wherever it is accessed, so downloading and installing will not be necessary.
The NNS will manage all upgrades and changes to Endorphin phones since the company is reliant on The Internet Computer.
Is it A Crypto Project?
The Internet Computer is starting to resemble a World Economic Forum end game more than a cryptocurrency project, so you’re not alone.
The Internet Computer’s internet identity has raised concerns among a number of people regarding the implications on privacy. Besides, there are lots of closed-source and patent-protected applications.
Although the Internet Computer is technically decentralized, the NNS operates on a dedicated subnet administered by the Dfinity Foundation, so it is a single point of failure.
In comparison, Dfinity Foundation, and its affiliates have only been allocated 50% of the ICP tokens. Their tokens are likely to be locked for eight years at the most.
As your ICP is locked in the NNS for a longer period of time, you have more voting power, plus inflation rewards will be higher. Governance is then a compound of these factors. The Internet Computer is completely under the control of the Dfinity Foundation.
As its token remains locked, it is likely to gain greater voting power over time and this is potentially dangerous, since the extent to which the NNS governs the Internet Computer is unclear and its powers are already quite extensive.
Dfinity Foundation’s hardware is curated by Dfinity Centers, and even then the National Networking System could reject an application from them.
It is still important to note that despite the fact that most applications run on servers, only Internet Computers are unstoppable from a technical standpoint. According to the NNS, undesirable apps might be shut down.
Would the NNS be able to perform this same action for individuals? Using The Internet Computer would effectively disconnect the majority of the population from society since even their phones would leverage the protocol. In addition, this isn’t a hypothetical situation.
The Internet Computer will be designed to conform with the relevant laws of the countries where it will be used, Dominic Williams stated in an interview in 2018.
This is possible, but how? A protocol governed by an open-source model and decentralization. I don’t see anything cryptocurrency-like about that.
Essentially, the Dfinity Foundations team would like to assemble The Internet Computer and crown themselves as Internet kings instead of eliminating today’s tech giants’ tyranny.
Fortunately, this is an easy problem to solve, since we can open source the project so people can build their own network if this nightmare scenario occurs. As it turns out, the Internet Computer’s code will also be made available for public inspection as part of Dfinity Foundation’s upcoming roadmap. It is just a matter of hoping it won’t be too late when they finally do it.
I‘m not a financial advisor and this article is simply for educational purposes. It should not be used to make any decisions regarding your finances. If you need investment advice, please contact a qualified financial advisor.
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