Both cryptocurrencies and decentralized finance (DeFi) are lauded as necessary. However, both still operate on a centralized system — the Internet itself. Internet Computer Protocol (ICP) and its ICP coin aim to change that. Here’s everything you need to know about the innovative project in 2024.
KEY TAKEAWAYS
➤ Internet Computer Protocol (ICP) attempts to decentralize the internet by allowing scalable, on-chain applications.
➤ ICP Coin is both a utility and governance token, which allows holders to participate in voting and power decentralized applications.
➤ The Bitcoin Layer-0 integrations allows ICP to interact directly with Bitcoin, allowing functionality like smart contracts on Bitcoin.
➤ The Service Nervous System (SNS) DAO offers a novel approach to decentralized autonomous organizations.
Internet Computer Protocol (ICP) explained
ICP coin is the native cryptocurrency of the Internet Computer Protocol. Simply put, ICP is the first blockchain project of its kind to scale the Internet itself instead of just at the app or data storage layer. This way, both individuals and businesses can deploy any software/content on the Internet without relying on the mercy of monopolies such as Facebook, Google, Amazon, or Twitter.
As a scalable, open-source project, the protocol is not only interoperable with other blockchains, but all applications previously relying on a centralized infrastructure can run on-chain. Alongside Filecoin, ICP coin is a key ingredient in the construction of web3. It makes the Internet open again by relying on decentralized blockchains and smart contracts to reconstruct the Internet’s full stack.
Bitcoin appeared, you know, in 2009 and gave us digital gold. Ethereum launched in 2015 and gave us smart contracts. And then finally, the Internet Computer launched in 2021 and produced something you can think of rather like a crypto cloud.
Dominic Williams, Chief Scientist and founder of DFINITY Foundation: EDCON 2023
Consider how MetaMask works — it binds DeFi protocols within a single interface. ICP goes deeper than that, allowing smart contracts to directly connect to other smart contracts and deliver web content to the end-user.
Who is behind ICP Coin?
The ICP coin and protocol launched in 2016 under the supervision of the non-profit Dfinity Foundation, consisting of over 200 developers across offices in San Francisco, Zurich, Palo Alto, and Tokyo.
Altogether, they have impressive academic work under their belt, with almost 100,000 academic citations. Funding rounds in 2018 raised nearly $195 million to develop the project.
Dominic Williams developed the Internet Computer Protocol and ICP coin, portraying ICP as making a “new open internet” and reimagining the Internet “as a computer that hosts secure software with superpowers.”
Williams is a cryptographic scientist, foremost known as the inventor of Threshold Relay and Probabilistic Slot. The foundation’s investors are largely venture capitalists, including Aspect Ventures, Amino Capital, Eterna Capital, Polychain Capital, and Andreessen Horowitz.
In 2020, Dfinity unveiled its first DApp at the annual Davos conference under the umbrella of the World Economic Forum. Dubbed LinkedUp, the app was a decentralized version of LinkedIn. Likewise, they later released CanCan, an open version of TikTok consisting of only 1000 lines of code and able to scale up with storage needs.
On May 7, 2021, the Internet Computer Protocol launched its first public mainnet. According to its roadmap, the ICP-powered open internet should overshadow the closed internet within 20 years.
How does ICP work?
While it is largely open-source, the Internet Computer’s code is licensed under the Apache License 2.0, with some components using the Internet Computer Shared Community Source License and Internet Computer Community Source License.
The network has been programmed using a language developed by the Dfinity Foundation called Motoko. However, ICP’s framework also supports RUST and C languages.
Like Cardano and Ethereum, the Internet Computer is based on the proof-of-stake (PoS) consensus but consists of four layers: identity, random beacon, blockchain, and notary.
Another key difference is that ICP uses canisters instead of smart contracts to auto-execute actions. Thanks to the four layers, these canisters provide practically infinite scalability.
More importantly, the novel Chain Key Technology makes ICP run at web speed — actions/queries are executed in milliseconds while its block rate speed should ramp up to 1,000 bps. In comparison, Ethereum’s produces blocks at about 13.22.
Altogether, by combining the power of all the blockchain’s nodes, ICP coin generates a unified platform able to host any type of application at any scale.
What’s special about the ICP coin?
Previously known as DFN, the Internet Computer or ICP coin is directly tied to ICP’s Network Nervous System (NNS) as its utility coin. NNS is the governance protocol for managing the network, first unveiled in September 2020. It consists of four components:
- Data Centers: 111
- Nodes: 1,469
- Subnets: Similar to Polkadot’s parachains
- Canisters: Ultra-scalable smart contracts
As with other blockchains, users must lock their ICP coin to participate in governance. Once locked in for a period of time, they become “Neurons” that allow stakeholders to vote, with the voting power being proportional to the number of locked ICP coins.
Moreover, each month, neurons yield voting rewards. Outside of governance, Computer coins are used to power DApps hosted on ICP’s blockchain. If a developer wants to deploy an app, they must convert Computer coins into “cycles” that run all the functions within the smart contract canisters.
As you can see from the infographic, Internet Computer tokenomics relies on both inflationary and deflationary forces, with its initial coin supply at 469.2 million. As of Sept. 12, 2024, ICP’s circulating supply is 469.9 million ICP. The total supply is 522.3 million ICP.
Within a week of ICP’s mainnet launch, the Internet Computer coin achieved a significant market cap of $71.8 billion.
Fast forward a number of years and the market cap of ICP is at $4 billion, with a price of $8.44 (as of Sept. 12, 2024). Though the bear market caused many cryptos to trade lower, ICP has steadily made a comeback in Q3 2024.
Bitcoin layer-0
In 2024, the Internet Computer Protocol is positioning itself as a layer-0 for Bitcoin. The project has successfully integrated threshold-Schnorr signatures, introducing a new smart contract component to Bitcoin through Chain Fusion Technology.
As a result, ICP will be able to read and write directly to Bitcoin, allowing decentralized applications (DApps) to interact directly with Bitcoin. This upgrade will enable ICP smart contracts to create Runes, manage Ordinals, and handle BRC-20 token transactions, opening new avenues for Bitcoin-centric decentralized finance (DeFi).
This approach combines Bitcoin’s security and liquidity without relying on centralized intermediaries. This will allow ICP to offer a decentralized platform that supports advanced functionalities like Bitcoin inscriptions and decentralized trading platforms.
Service Nervous System (SNS) DAOs
ICP also dabbles in the field of decentralized autonomous organizations (DAOs) and uses an innovative Service Nervous System (SNS) to govern DApps.
SNS DAOs on the Internet Computer Protocol are a category of DAOs capable of managing treasuries autonomously without the need for custodians or multi-signature agreements. They also support hosting un-censorable, on-chain DAO interfaces that operate without gas fees and are beyond external control.
This architecture ensures high transparency and security, preventing scenarios where core teams can manipulate governance proposals.
The SNS framework started with a unique DAO known as the Network Nervous System (NNS), which governs the entire Internet Computer network. This system is embedded directly within the ICP protocols of the Internet Computer. It’s also necessary to point out that the DAO model ICP uses is broad and not confined to the SNS framework alone.
Should you buy ICP?
Internet Computer’s impressive academic backing cannot be overstated. The unique project provides an innovative use case and an ambitious mission to disrupt the old pillars of web2 — Google, Meta, Microsoft, and Amazon. With ICP, developers can build, host, and serve applications in a truly decentralized manner. The adoption of this framework and future developer activity is set to impact the potential price of ICP significantly.
Should adoption grow further, ICP looks to be a good option for investors in 2024. However, remember that crypto prices depend on several factors. Social sentiment, wider market forces, and successful competitors could all play a part in determining ICP’s price. As always, prioritize security and never invest more than you can afford to lose.
Disclaimer: This article is for informational purposes only and should not be considered investment advice.
Frequently asked questions
A smart contract platform is a blockchain-based system that allows users to create and execute smart contracts. They provide a secure and transparent environment for executing smart contracts. Some examples of smart contract platforms include Ethereum, EOS, and TRON.
Neurons enable users to “time-lock” their ICP utility tokens in exchange for voting power, which can be used to vote on proposals submitted to the system and automatically executed. Neurons can be programmed to follow each other in various ways, allowing them to vote automatically, resembling a form of liquid democracy.
Cycles are used as a computational resource on the Internet Computer blockchain to execute actions. The cost of computation is measured in cycles. Cycles are not a currency; they cannot be exchanged for value in the form of an Internet Computer Protocol coin.
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