What is Icon? (ICX)
The Beginner’s Guide
Icon aims to build a decentralized network of networks powered by cryptocurrencies.
In this way, Icon describes its goal as being to establish a “digital nation” wherein different economic actors can issue and control their own forms of value, under rule systems they select.
The inspiration behind the design is the structure of real-world economies, in which businesses, nonprofits and public institutions, all leverage a common means of value (a national currency), yet remain distinct but interoperable economic actors.
Put another way, the idea is that computer applications can use the Icon software as infrastructure to create their own currencies and economies. Computers running the software (nodes) can then elect to support economies in the Icon ecosystem according to their interests.
The Icon Republic acts as the center of the Icon blockchain’s operation, governing the process by which new ICX cryptocurrency is minted in each block.
As of 2020, the Icon team continues to release updated roadmaps regularly on Medium.
Who created Icon?
Founded in 2017, Icon was released by the Icon Foundation, an organization based in South Korea that drives development for the project.
In September 2017, an initial coin offering (ICO) for Icon’s cryptocurrency, ICX, raised 150,000 ETH (roughly $43 million) in a sale that included 50 percent of Icon’s token supply.
The official Icon blockchain launch occurred in January 2018 and ICO participants received their ICX cryptocurrency in June of that year.
In 2019, Icon released its own token standard, IRC16, which allows users to issue tokenized assets and securities.
How does Icon work?
The Icon blockchain uses a delegated proof-of-stake consensus algorithm to determine which nodes can add new blocks to its blockchain.
Icon’s blockchain, in particular, ensures collaboration between five major components.
Icon Republic – The network’s governing structure and the decision committee for the blockchain’s operations. Icon Republic is composed of nodes from Icon communities.
Icon Communities – A network of nodes within a single governance system, Icon communities can operate with their own set of rules and consensus algorithms.
Community Representative (C-Rep) – Elected nodes from each community trusted to communicate with Icon Republic. C-Reps receive ICX for their work.
Community Nodes (C-Nodes) – Act as infrastructure for each community and are responsible for governing and maintaining a community’s blockchain.
Citizen Nodes – Don’t have voting power, but have the ability to make transactions within a community, with other communities and with the Icon Republic.
How Loopchain Works
Loopchain is the algorithm that powers the Icon blockchain, integrating messaging between all the nodes that make up the Icon Republic.
To accomplish this, Loopchain uses something called the Loop Fault Tolerance (LFT) algorithm.
Similar to other delegated proof-of-stake (DPoS) algorithms, Loopchain assigns nodes to group transactions into blocks, add those blocks to the blockchain and distribute these blocks to other network nodes. Validation nodes, in turn, confirm the creation of the block, check if the block hash is correct and validate the block data.
How Icon differs from a traditional DPoS blockchain is that it reduces the number of steps needed for the consensus process.
More specifically, LFT uses a technique, called Spinning, that simplifies the algorithm used to select who can create blocks and the validator nodes that confirm them.
Why does ICX have value?
Core to Icon’s economy is a concept called the “Icon Incentives Scoring System” (IISS), an algorithm tasked with measuring contributions to the ecosystem and distributing ICX.
This model differs from what is commonly implemented on Bitcoin (BTC) and Ethereum (ETH), where a single group (miners) must buy specialized computer hardware and burn energy to compete for the new cryptocurrency it mints.
Each ICX cryptocurrency can be locked, or “staked,” to represent one vote that can be delegated to support various entities.
Representatives – Block producers and validators in the Icon Republic, consisting of public and community representatives.
Dapps – Decentralized applications operating on one or more smart contracts.
EEPs – Projects funded by the Icon blockchain and that are meant to encourage the growth and expansion of the ecosystem.
By staking ICX, owners and the entity they delegate votes to receive a small reward. The IISS uses staking to determine I-Score, a unit used to quantify a user’s contribution to the network.
More details on ICX staking can be found here.
The IISS dynamically determines the rewards and issuance rates per block using variables including Public Representative votes (C-Reps), the amount of transaction fees in a block and the total amount of ICX staked. These variables are also used in the I-score calculation.
New ICX cryptocurrency is minted every block and sent to a public treasury contract where contributors can claim ICX as determined by their I-Score. The amount of ICX minted is determined by the amount of transaction fees in each block.
If the amount of transaction fees within a block is equal to the required ICX issuance, no new ICX cryptocurrency will be minted.
Kraken's Crypto Guides
- What is Bitcoin? (BTC)
- What is Ethereum? (ETH)
- What is XRP? (Ripple)
- What is Bitcoin Cash? (BCH)
- What is Litecoin? (LTC)
- What is EOSIO? (EOS)
- What is Stellar? (XLM)
- What is Cardano? (ADA)
- What is Monero? (XMR)
- What is Tron? (TRX)
- What is Dash? (DASH)
- What is Ethereum Classic? (ETC)
- What is Zcash? (ZEC)
- What is Basic Attention Token? (BAT)
- What is Algorand? (ALGO)
- What is Icon? (ICX)
- What is Waves? (WAVES)
- What is OmiseGo? (OMG)
- What is Gnosis? (GNO)
- What is Melon? (MLN)
Why use ICX?
Icon may be of interest to developers seeking to build applications on a public blockchain offering the ability to handle a high number of transactions.
As an example, the Icon Foundation says its technology is being used to secure medical records and to expedite claims and payments in the insurance industry, among other use cases.
Of interest may also be Icon’s strategic positioning in the South Korea market, which could become an advantage in generating attention and partnerships.
Now you're ready to take the next step and buy some ICX!