Will a new era of decentralized internet come with Internet Computer (ICP)?

Almost every blockchain project that has emerged in the last 5 years in the crypto market seeks to solve the same problems — low bandwidth and high cost of commissions.

What is an Internet Computer?

Internet Computer is a set of protocols or, more precisely, subchains aimed at creating a decentralized cloud service and expanding the functionality of the Internet without a central access point.

The global goal of Internet Computer developers, as you can guess from the name, is to create a decentralized Internet with independent data centres instead of classic cloud services.

Work on Internet Computer began back in 2015 by the DFINITY Foundation team. The project's developers sought to rethink the relevant blockchain architecture at the time and design a unique decentralized protocol based on numerous studies in the field of cryptocurrencies. The blockchain itself is set to launch in May 2021. The project came out under the name Dfinity but was later renamed Internet Computer.

In three rounds of funding, the Internet Computer project has raised over $165 million from major funds such as A16z, Polychain Capital, Multicoin Capital and CoinFund.

How does an Internet Computer work?

The Internet Computer blockchain works based on the Proof-of-Stake consensus mechanism. This protocol uses a proprietary type of smart contracts called Canisters. These smart contracts make it possible to create decentralized analogues of Google Cloud, Amazon Web Service, Microsoft Azure and the like.

According to ICP Explorer, Internet Computer's network bandwidth ranges from 5,000 to 7,000 transactions per second. However, this does not mean that the network cannot handle more, as the number of transactions may not be large enough. On average, transactions are completed in 2 seconds and the request response time is only 100ms, making Internet Computer one of the highest performing blockchains.

Project strengths

According to the Internet Computer team, the blockchain is designed to scale infinitely, adapting to any workload.

Internet Computer has a well-developed ecosystem with over 180 projects from various fields:

• DeFi,
• DAO,
• SocialFi,
• GameFi,
• NFT,
• metaverses.

For example, protocols enable the development of decentralized applications for Internet Computer on Solidity, Ethereum's smart contract language. The Internet Computer ecosystem even includes a decentralized email service called Dmail and its Twitter counterpart, Dwitter.

In 2022, Internet Computer developers launched a blockchain integration feature with the Bitcoin protocol, allowing bitcoins to be received, stored and transferred via smart contracts. This made blockchain the bridge between Internet Computer and Bitcoin.

Weaknesses

Despite its developed ecosystem, the Internet Computer network is virtually isolated from DeFi and other blockchains, although it has strong technology underneath. Even Bitcoin has its second-layer solutions, as well as protocols for issuing tokenized or, in other words, wrapped BTC, allowing users to enjoy the full capabilities of DeFi outside of the main network.

However, many tokenized, including wrapped tokens, such as stBTC and stETH, exist on the Internet Computer network.

ICP cryptocurrency

ICP is the native cryptocurrency of the Internet Computer network, used for staking rewards and transaction fees, but the coin's applicability is not limited to this.

For example, developers and companies can convert ICP cryptocurrency into cycles used to build and run applications. ICP holders can blockchain the coins and participate in the management of the network, as well as use them to pay for subscriptions or NFTs — all provided for in Internet Computer.

ICP trading started virtually after the network's launch in May 2021 — almost at the height of the bullish trend in the crypto market. However, the price of the ICP cryptocurrency was probably grossly overvalued: at the very start of trading, its price reached an all-time high of $750. This made ICP one of the most expensive cryptocurrencies in history when listing.

Immediately after reaching the peak, the price of ICP began to fall rapidly, and within just a month and a half, it dropped almost 22 times to $34.4. After a brief rise to $66, the ICP cryptocurrency continued to decline until the end of 2022, when the price was $3.71. Since the beginning of the year, the ICP rate has risen like most other cryptocurrencies, rising 2.5 times to $8.73 as of December 2023.

The ICP cryptocurrency is traded on major crypto exchanges such as Binance, Coinbase, Kraken, ByBit, OKX, HTX and KuCoin.

The future of Internet Computer

This project has perhaps one of the most extensive and detailed roadmaps in the crypto industry. It has so many items that just to list them would require writing a longread. Only in the updates of the primary protocol have 14 significant items been implemented, 6 are in development, and 5 are to be implemented.

The roadmap mainly contains technical aspects of the project, such as the functioning of nodes and improvements to the validator rewards system. Still, one of the most interesting planned updates is the integration with the Ethereum blockchain, which will allow smart contracts from both of these networks to interact without any centralized intermediaries. The integration will also enable smart contracts based on the Ethereum Virtual Machine (EVM) to run on the Internet Computer blockchain.

Internet Computer is a serious project, although its cryptocurrency ICP is currently going through some bad times. According to various forecasts, ICP is unlikely to come close to its ATH in the coming year and will cost between $15 and $17.