What is Internet Computer Protocol? (ICP)
Summary of Internet Computer Protocol
- The Internet Computer Protocol offers a quick and efficient blockchain to enable decentralized Web3 services.
- ICP is Internet Computer network’s native utility token that is used to facilitate the network’s governance and reward network participants.
- Internet Computer uses innovative technologies such as chain key cryptography to run its platform.
Internet Computer Protocol is a blockchain network that aims to bring greater efficiency, speed and decentralization to computation and data storage. The project aims to address shortcomings associated with the traditional Internet, such as monopolization of services, poor systems security and misuse of personal data.
Three features differentiate the Internet Computer from other blockchain networks:
- Anyone can create a decentralized application (dApp) on its blockchain platform thanks to a simplified user interface.
- ICP runs on a decentralized network with dedicated hardware established by independent parties rather than a cloud maintained by centralized data servers.
- The blockchain processes transactions quickly, setting it apart from other cryptocurrencies that may take 30 minutes or more to complete transactions.
Internet Computer network’s native utility token, ICP, is used to facilitate the network’s governance, compensate nodes that perform computations and to reward participants for their engagement in its ecosystem.
Who created Internet Computer (ICP)?
The Internet Computer blockchain was developed by the DFINITY project, which was founded by Dominic Williams in 2015.
The DFINITY Foundation was created in Switzerland in October 2016 to scale-up the project's R&D efforts after a period of incubation. The foundation first raised funding through a public ICO in February 2017.
Several rounds of funding were then run in 2018, raising more than $150 million dollars from well-known investors.
The DFINITY Foundation is based in Zürich where it runs a research center. The foundation runs another center in California, as well as numerous remote teams.
What is the Internet Computer and ICP?
The Internet Computer Protocol connects a sovereign network of dedicated devices to form a “world computer,” which is used to enable the decentralization of Web3 services.
A Web3 enabler
Web3 platforms are able to leverage the Internet Computer blockchain to solve privacy issues found on traditional social networks. These traditional networks pose numerous privacy issues for users, share sensitive information with corporations and overwhelm members with advertisements. Users may be asked to agree to general terms and conditions when signing up for these platforms, but cannot influence them.
Users of decentralized social networks built on the Internet Computer blockchain may log in to these platforms cryptographically using Face ID on their phone or the fingerprint sensor on their laptop. They may also store files and share media at web-speed or instantly transfer NFTs and cryptocurrencies like bitcoin using chat messages. These services can make their users part owners and team members by airdropping governance tokens from a management DAO to those who refer other users or help with tasks like content moderation.
Services like this are being built today on the Internet Computer blockchain, which plays the role of a world computer, capable of hosting even the most demanding Web3 services.
The world computer
The Internet Computer blockchain enables full decentralization because it allows developers to build online services without needing to rely on traditional information technology (IT) such as cloud computing services, databases and web servers which are centralized, insecure, subject to censorship and often unreliable.
Because online services built on the Internet Computer run without the help of traditional IT, they are fully decentralized.
Developers build services using smart contract software called “canisters” that interact with the web and other blockchains without bridges. Canisters are able to scale and run with an efficiency comparable to traditional IT.
When Web3 services have been built using other blockchain ecosystems, the traditional IT used can be replaced by Internet Computer smart contracts which may provide more efficient decentralized data storage and processing.
Developers can extend other blockchain services and build SocialFi, GameFi and metaverse Web3 services, DeFi rails that serve their own web experiences and enterprise systems using Internet Computer smart contracts.
Today, the Internet Computer can host and serve a modern social network without help.
On the Internet Computer, smart contracts pay for their own computation (a.k.a “reverse gas”).
Users can create sessions with online services which allow them to transparently interact with the blockchain multiple times. Internet Identity enables users to cryptographically authenticate and create sessions using security features built-in to their personal devices, such as Face ID on their phone or the fingerprint sensor on their laptop.
Community DAOs can control services entirely from the blockchain and apply feature updates and configurations that developers propose. This further decentralizes services, increases security and protects developers from regulators by allowing these services to run autonomously as protocols.
Web3 services can reward end-users with governance tokens from their community DAO — for example if they help with content moderation, or advocate for the service by referring new users — making them owners and part of the team, powering viral growth.
The Internet Computer is created by Internet Computer Protocol and its key token is called ICP.
Why does Internet Computer (ICP) have value?
The ICP token has three main utilities. Firstly, ICP provides a source of cycles, which are used to fuel smart contracts when they perform computation. When ICP is converted into cycles, which are burned, it disappears creating a deflationary mechanism.
Secondly, ICP can be staked in the Network Nervous System DAO that controls the Internet Computer blockchain to create voting neurons. Voting neurons generate rewards for users when they participate in governance. Thirdly, ICP plays the role of a store of value, by allowing users to invest in decentralization sales run by Web3 services.
How does Internet Computer Protocol work?
The Internet Computer blockchain runs on a sovereign network of dedicated “node machines,” in much the same way the internet runs on dedicated network routers. The node machines are standardized hardware that are run by independent node providers around the world using autonomous data centers.
The nodes connect to each other over the internet using the Internet Computer Protocol, which is also known as ICP. Using the ICP protocol, the nodes form the Internet Computer blockchain, which acts as a public World Computer.
Chain Key Cryptography
ICP incorporates a new cryptography framework, called “chain key cryptography.” This makes it possible for blockchains to create public “chain keys” and then sign messages using distributed private key material.
Chain key cryptography uses a single public key to allow connected devices to verify the authenticity of artifacts from the Internet Computer blockchain. This contrasts from traditional blockchains which require large amounts of data to verify even small artifacts.
The Internet Computer forms multiple “subnet blockchains.” Subnets are independent blockchains found on the network that can integrate with each other to increase their capacity. These are genuine subnets in the sense that they are transparent to smart contracts and are combined to create a single limitless blockchain. This is similar to how subnets extend the internet but are invisible to applications using the internet.
Subnet blockchains use a novel consensus system and cryptographic framework which allows applications to securely interact with them without need for a local node. Applications can simply check the chain key signature on messages exchanged during their interactions. A valid message shows not only that the message from the blockchain has not been tampered with but also that the subnet blockchain is functioning correctly and has not been corrupted.
The Internet Computer network is controlled by a master subnet blockchain, which runs an advanced DAO called the Network Nervous System (NNS). This DAO instructs nodes how to structure the network. Nodes can tell that the instructions are genuine by checking the validity chain key signature – since the chain key of the NNS subnet is constant for all time.
The NNS instructs the nodes to combine to form subnet blockchains. Because of the way the cryptography works, nodes can be added and removed from subnets at any time, without changing their chain keys.
Because subnet blockchains do not need copies of each other's state to validate them, they exchange messages directly and the network can just add new subnets to increase its capacity.
An application only needs to know the chain key of the NNS subnet to interact with any point in the network, since it signs the chain keys used by the subnets and subnets include proofs that their chain keys have been signed by the NNS with their signatures.
Canister Smart Contracts
When interactive web content is running inside a browser it validates the chain key signatures on content and responses served by “canister” smart contracts hosted by the Internet Computer.
Canister smart contracts are software “actors” which are composed of WebAssembly bytecode and persistent memory pages that it runs within. This allows multiple smart contracts to run in parallel deterministically on a single subnet.
Canister smart contracts are very powerful, and can be used to build anything. For example, multi-block transactions (computations) are possible, along with daemon smart contracts which are automatically invoked periodically by the blockchain.
A new development is that the chain key cryptography framework of the protocol has been extended to allow smart contracts to manage accounts and sign transactions on other blockchains. For example, Internet Computer smart contracts can create bitcoin addresses and send and receive bitcoin, making it possible to build native DeFi systems for the Bitcoin network.
Another application would be the creation of decentralized web experiences for Ethereum. Internet Computer smart contracts can create and sign Ethereum transactions and then query the results using HTTP outcalls.
Why Buy ICP?
Investors may find Internet Computer attractive based on its goal of creating a blockchain platform for faster transaction settlement time and with theoretically infinite capacity.
ICP’s goal of building a modern internet with the ability to host any scale of application, from DeFi and smart contract applications to tokenized internet services and websites, may also be of interest to those who want to add ICP to their portfolio.
In addition, developers and investors may find the ICP platform appealing for building open internet services that would provide products and services that have the potential to replace centralized big tech companies.
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