About Internet Computer (ICP)

What is Internet Computer protocol?

The Internet Computer protocol is a blockchain network that aims to bring greater efficiency, speed, and decentralization to computation and data storage. It operates on its own proprietary protocol called the Internet Computer Protocol (ICP) .

Unlike traditional web2 platforms that are closed and require permission from the original protocol deployer or a centralized control interface, the web3 protocol, which includes the Internet Computer protocol, provides a distributed internet infrastructure on which anyone can build and create internet businesses without permission .The Internet Computer protocol enables computers to connect to each other and share information without the need for a central server . It uses independent data and allows for decentralized access to a large amount of data stored on Ethereum . This decentralized access is important because it provides a way for smart contracts to directly reference and access data stored on the blockchain.

The Internet Computer protocol is part of the web3 ecosystem, which includes various infrastructure protocols that generate consistent revenue by providing useful services . These services range from storage to computation to wireless data transmission.

History of Internet Computer (ICP)

Seeds of Innovation (2013-2015)

In 2013, Dominic Williams, inspired by Bitcoin's growth, began exploring faster blockchains. The Pebble project, initiated in 2014, introduced groundbreaking blockchain design concepts. However, Dominic's involvement in the early Ethereum community led to a shift in focus.

Shaping Vision (2015-2016)

Dominic's belief in a World Computer blockchain gained traction in 2015. Despite skepticism, he proposed novel consensus mechanisms. In 2016, Dominic co-founded String Labs, redirecting efforts to incubate DFINITY, envisioning it as a true World Computer blockchain.

Foundation Formation (2016-2018)

The DFINITY Foundation was established in Zug, Switzerland, in October 2016. Initial fundraising efforts, including a seed donation in 2017, laid the foundation for DFINITY's growth. By 2018, the foundation published its consensus system white paper and raised significant funds in the Strategic and Presale Rounds.

Technical Triumphs and Challenges (2018-2021)

With substantial funding, DFINITY scaled its operations, attracting top talent, including renowned cryptographers. The development of key protocols showcased DFINITY's technical prowess. The ICP token ledger was created in 2017 on the Ethereum network, marking a crucial step in bootstrapping the ecosystem.

Genesis and Beyond (2021 Onwards)

The Internet Computer network officially launched in May 2021, marking a historic moment in tech and blockchain. Despite facing industry opposition, the community has grown rapidly, with thousands of developers contributing to unique projects that run entirely on the Internet Computer. The project's overarching goal is to establish a new web3 internet ecosystem, aiming to replace traditional IT and drive a blockchain singularity.

How Does ICP Work?

Architecture

The Internet Computer (IC) introduces a groundbreaking architecture for scalable blockchain-based smart contract execution. Utilizing canister smart contracts, the IC allows developers to deploy units with flexible mutability policies. Canisters pay for resource consumption using cycles, acquired with the ICP token, implementing a reverse gas model. Unlike traditional blockchains, canister smart contracts on the IC boast enhanced capabilities, holding gigabytes of memory at a low fee. Direct browser-canister interaction, upgradability, and secure user authentication via Internet Identity further distinguish IC's architecture.

Subnets form the foundation of IC's scalability, each operating independently, concurrently hosting canister smart contracts. Asynchronous messaging between canisters across subnets ensures loose coupling, a key to achieving unprecedented scalability. The core Internet Computer Protocol, featuring peer-to-peer, consensus, message routing, and execution layers, drives progress independently within each subnet.

Chain-key and chain-evolution technologies underpin the IC's decentralized operation, setting it apart. Governance is decentralized at both platform and Dapp levels, with the Network Nervous System (NNS) overseeing the entire IC and the Service Nervous System (SNS) tailored for Dapp governance.

Core IC Protocol

The core part of the IC protocol, the core IC protocol operates on a 4-layer architecture within each subnet, facilitating the creation of a scalable blockchain-based replicated state machine. The protocol's four layers include:

1. Peer-to-peer (P2P): This foundational layer ensures secure communication between subnet nodes, creating a virtual peer-to-peer broadcast network. Utilizing Internet Protocol (IP) connectivity, it enables the broadcast of network messages, known as artifacts, ensuring eventual delivery to all subnet nodes.
2. Consensus: Driving the subnets, consensus is vital for agreeing on and ordering messages. The IC's consensus protocol prioritizes low latency, high throughput, robustness, and cryptographically guaranteed finality, distinguishing it from probabilistic finality systems like Bitcoin.
3. Message Routing: This component processes blocks of messages from consensus, placing them in canister input queues. It facilitates the execution round, routes output queue messages to recipients, and enables cross-subnet messaging for secure communication between canisters across subnets.
4. Execution: The topmost layer executes canister smart contract code using a WebAssembly virtual machine. It features deterministic time slicing, concurrent execution on multiple CPU cores, and a pseudorandom number generator, offering unique capabilities such as splitting the execution of large messages across multiple rounds.

Chain-Key Technology

Chain-key cryptography, a sophisticated cryptographic toolbox, enables unprecedented functionalities and scalability of the Internet Computer Protocol . A crucial element is the threshold signature scheme, distributed among subnet replicas for enhanced security.

Chain-key signatures facilitate trustless integration with blockchains like Bitcoin and Ethereum, allowing on-chain creation of signed transactions. This technology ensures the strongest and most decentralized integration without additional trust assumptions or third-party involvement.

Bitcoin integration on the Internet Computer relies on chain-key signatures and direct interactions with the Bitcoin network, maintaining state information and transmitting transactions.

Chain-key tokens, exemplified by Chain-Key Bitcoin (ckBTC), present a decentralized replacement for wrapped tokens, utilizing chain-key cryptography to enable secure transfers and trading while mitigating risks associated with traditional intermediary-based wrapping.

Chain-Evolution Technology

Internet Computer's Chain-evolution technology achieves infinite scalability by horizontally scaling its capacity through the creation of new subnets, similar to traditional cloud infrastructure. The Network Nervous System (NNS) initiates the formation of subnets, selecting spare nodes to establish the new subnet blockchain. This ensures the platform's scalability.

In terms of fault tolerance, the NNS responds to node failures in the distributed system by replacing them with spare nodes, enabling continuous operation. The new nodes synchronize with existing ones, contributing to the subnet blockchain's consensus protocol.

Additionally, protocol upgrades are orchestrated by the NNS, the system's algorithmic governance. It addresses challenges in decentralized systems, allowing seamless upgrades, preserving smart contract states, minimizing downtime, and autonomously rolling out updates.

Smart Contracts

Motoko, the programming language for Internet Computer's smart contracts, boasts features like strong typing, actor-based design, and built-in support for persistence and asynchronous messaging. It ensures productivity and safety with automatic memory management, generics, and type inference. Motoko leverages the Internet Computer's Candid interface for seamless cross-language interoperability.

Additionally, Canister smart contracts can declare certified variables, obtaining Merkle tree certificates signed by the Internet Computer blockchain, enabling transparent data authenticity verification.

Web Access

The Internet Computer revolutionizes web access by hosting entire decentralized applications (Dapps) on-chain, ensuring security and decentralization without compromising speed or affordability. Serving HTTP requests securely, it enables Dapps to run seamlessly with both frontend and backend components. Assets are tamper-proofly certified with each accompanied by a subnet-signed certificate. Boundary nodes act as gateways, translating user requests to on-chain API canister calls, enhancing Dapp performance. Moreover, the Internet Computer introduces Internet Identity, a secure cryptographic authentication method, offering a privacy-focused alternative to traditional usernames and passwords.

Token Economics

Token Utilities

The Internet Computer (IC) makes use of a utility token called ICP. It serve several utilities.

1. Node Provider Rewards:Node providers receive ICP rewards for offering compute/storage infrastructure on the Internet Computer blockchain. Rewards are calculated in fiat, paid in ICP tokens, and vary based on geographical location to encourage wider node distribution. The rewards are minted, leading to inflation.
2. Governance and Voting:ICP token holders stake tokens to create neurons to participate in the governance of the Internet Computer. Neurons enable voting on proposals related to protocol upgrades, onboarding node providers, and creating subnet blockchains. Voting rewards are earned by stakers through the minting of new ICP tokens, causing inflation. Maturity increases for voting neurons, contributing to voting rewards.
3. Fuel for Computation/Storage: ICP tokens are burned to generate cycles, acting as fuel for canister smart contract computations. The "reverse gas" model allows pre-charged cycles for smart contracts, eliminating the need for users to pay for gas with each transaction, causing deflation.
4. Transaction/Proposal Fees: ICP holders are charged small transaction fees in ICP for transferring tokens and submitting proposals to the Network Nervous System (NNS). These fees are burned during transactions, contributing to deflation.
5. A Medium of Exchange:Besides protocol use cases, ICP can be used as a medium of exchange to pay for goods and services, such as NFTs and subscriptions.
6. Decentralization Swaps and DAOs:ICP facilitates decentralization swaps, allowing users to commit tokens to a DAO and receive DAO tokens at a predetermined price. Funds raised in decentralization swaps stay within DAO reserves, supporting future computation needs and code bounties.

Token Distribution

The Internet Computer employs both inflationary and deflationary mechanisms. Participants in governance can exchange their voting rewards for newly minted ICP. Similarly, rewards for node providers come in the form of newly minted ICP tokens. Conversely, ICP is transformed into cycles through a burning process, facilitating payment for computation and storage.

Why Is Internet Computer (ICP) Valuable?

The Internet Computer (ICP) is valuable for several reasons in the context of Web3 and blockchain technology. One of the key reasons is the shift towards a more decentralized and user-centric internet. In the Web2 era, the internet was controlled by a few gatekeepers who pocketed the value brought by user data. However, in the Web3 world, companies can make money in different ways that do not rely solely on user acquisition data and profits. Open platforms in the Web3 world share profits and value with users, allowing for the creation of more value for everyone involved.

Additionally, decentralized websites, which the Internet Computer enables, offer increased security and privacy for users. By utilizing blockchain technology, user data can be encrypted and stored securely on the distributed ledger, making it virtually impossible to tamper with or steal. Users can also interact with these websites without revealing their personal information, providing a level of anonymity that is not possible with traditional websites

Finally, the Internet Computer provides a unique solution for decentralized web storage. While blockchain technology like Ethereum is great at replicating a small amount of data on multiple computers, it is often limited in terms of on-chain storage capacity. NFTs, for example, leverage other storage solutions for their metadata. The Internet Computer, on the other hand, offers permanent, censorship-resistant, and immutable data storage with a 'pay once, store forever' model.

Highlights

• May 2021: DFINITY founder Dominic Williams revealed plans for the mainnet launch by the end of the year
• June 2021: Grayscale considered adding ICP to Its cryptocurrency investment products
• September 2021:DFINITY ICP ecosystem community ICPL announced the launch of an ecosystem accelerator and public incubation platform to support early projects.
• September 2021:ORIGYN, the first industry-agnostic NFT platform on DFINITY ICP, announced its launch at the end of 2021, introducing the native token OGY.
• September 2021:ICPSwap, the decentralized finance hub in the DFINITY ecosystem, announced the start of its second testing phase in October, introducing decentralized advertising and embedded social services.
• December 2021:DFINITY announces community approval for NNS Proposal #31471, enabling ICP transfers through Canister smart contracts.
• January 2022: ICP successfully integrated with Ledger hardware wallets, offering various new functionalities.
• March 2022:DFINITY Foundation announced the successful completion of the first phase of ICP and BTC direct integration.