- >What Is Internet Computer (ICP) and Can It Really Decentralize the Cloud?
What Is Internet Computer (ICP) and Can It Really Decentralize the Cloud?
In a sector that trades on being new and disruptive, Internet Computer is the newest and possibly most disruptive platform in town. Launched as recently as May 10, its native token — also called internet computer (ICP) — quickly rocketed up the rankings of cryptocurrencies by market cap, reaching as high as sixth on May 11 (according to CoinMarketCap).
This stunning performance gave ICP a price of nearly $450 and a market value of $55 billion. And while it has since subsided to a less eye-catching level of $111, it still remains the tenth most valuable coin by market cap, suggesting that it’s here to stay as one of the market’s biggest cryptocurrencies.
The question is: is the hype really justified? Can the Internet Computer platform really deliver on its promise to decentralize the cloud, and to provide a version of the internet without centralized servers?
Well, aside from the technical difficulties involved in realizing such a vision, there’s also the question of adoption: will enough people and businesses really care enough to want a decentralized cloud/internet? This remains open to debate, but if Internet Computer is successful in gaining serious traction and adoption, there’s a very good chance the price of ICP could rise even further.
Simon Chandler | Jun 2, 2021
What is Internet Computer?
Internet Computer is the brainchild of the DFINITY Foundation, a Zug-based non-profit that first conceived of the platform in 2015. Notably, DFINITY managed to raise some $163 million in 2018 from the likes of Andreessen Horowitz and Polychain Capital, underlining the credibility of its team and its plans.
Internet Computer has therefore been in the works for quite some time, with DFINITY finally giving it its public launch on May 10, when the price of ICP surged as high as $640 at one point.
The platform aims to let developers and businesses create applications and web-based services that run “directly” on the internet, rather than having to run through commercial cloud services and traditional data centers. Basically it aims to decentralize the cloud, with the wider goal of reversing the growing monopolization of internet services (e.g. Amazon Web Services and Google Cloud).
Internet Computer operates as a kind of smart-contract platform that allows websites and other internet services to operate autonomously, without the need for a specific owner or operator. Its underlying basis is a decentralized protocol called ICP (Internet Computer Protocol), which is currently being run by 48 independent data centers in various locations in North America, Europe and Asia.
Perhaps the key element in all this is Internet Computer’s use of Chain Key Technology, which is what will enable its blockchain to run at “web speed.” According to DFINITY, it does this by removing the need to retain old blocks in the current version of Internet Computer’s blockchain, something which helps the platform finalize transactions in a matter of milliseconds.
What is ICP token?
Within this framework, ICP (the token itself) serves a dual function. For one, it’s used to vote on governance proposals, which are submitted to the “Network Nervous System.” The NNS is a piece of autonomous software which governs the Internet Computer network, responsible for shaping everything from its monetary system to its technical architecture. Users who lock ICP into the NNS to vote on proposals receive newly minted ICP as a reward for their participation.
ICP is also used to power the individual subnets that process the web traffic/info flowing through the platform. It functions kind of like gas does in Ethereum, with ICP used in this way ultimately being burned.
Together, these two functions add an inflationary and a deflationary pressure on the price of ICP. However, assuming that Internet Computer attracts a significant amount of adoption, it’s possible that more ICP could be burned than minted, resulting in ICP’s price creeping up substantially over time.
In other words, $111 may end up seeming like an extraordinarily low price for ICP, at least if DFINITY’s plans ever come close to being realized.
The thing is, are DFINITY’s plans realistic? This is the million-dollar question, since while the foundation’s aims are certainly noble, there’s obviously no guarantee that they’ll ever result in Internet Computer becoming a widely used platform.
First of all, let’s make no mistake, DFINITY faces a Herculean task in making Internet Computer a viable and secure platform. Even Bitcoin, which is arguably the model of stability and security in the crypto developer world, isn’t free from the occasional bug. So what chance does a new — and seemingly more ambitious — platform like Internet Computer have?
As of writing, there isn’t really any research into whether its software is sound or without significant bugs. That said, detailed Q&As on Reddit between developers and DFINITY’s Dominic Williams indicate that the wider development community has a number of issues with the platform.
There’s also the observation that many businesses might prefer centralized clouds, if only because this gives them more direct recourse (i.e. someone to complain to) in the event of mishaps. And this raises the bigger, more speculative question surrounding Internet Computer: do enough people and businesses care enough to adopt a decentralized version of the cloud?
Of course, the same question could be asked about Bitcoin and decentralized money, so we’ll leave it to readers to decide for themselves how much adoption Internet Computer is likely to attract in the long run.
Fortunately, DFINITY is very serious about solving any technical challenges Internet Computer is likely to face in the future. It announced a CHF 200 million (about $220 million) fund for developers on May 25, highlighting the support it will give to strengthen its wider ecosystem. This shows that, while its success isn’t guaranteed, it’s certainly one to watch for the future.