What is Dfinity's Internet Computer (ICP)?

By Adriana Hamacher and Matt Hussey

Today, a handful of big-tech companies increasingly call the shots over Internet content, functionality and data. One recent example is the enforced fee changes that led Fortnite developer Epic to sue Apple.

The non-profit Dfinity Foundation’s solution is the Internet Computer, which would reimagine the Internet as humanity’s primary compute platform.

What is the Internet Computer?

The Internet Computer is a secure, decentralized and cost-effective blockchain network that aims to expand the functionality of the Internet.

It’s housed in a network of machines distributed around the world and is being put to work running the next generation of mega-applications—decentralized versions of Uber, eBay, Facebook, and more.

How does the Internet Computer compare to similar blockchain platforms?

Today, Ethereum dominates the crypto industry. Dfinity aims to solve the scaling problems experienced by Ethereum without compromising on security or decentralization—something another rival, EOS, has been criticized for.

Dfinity claims the Internet Computer can finalize transactions in one-to-two seconds. As a comparison, Bitcoin takes around 10 minutes, and Ethereum 15 seconds (depending on network congestion).

But the problem Dfinity addresses extends beyond blockchain technology. It aims to take on the $370 billion cloud computing market, and free the world of its dependence on centralized server farms.

"The vision we have is that people essentially abandon traditional IT and build on the public Internet."

Dominic Williams

A timeline for the Internet Computer

• October 2016: The project is founded by serial entrepreneur Dominic Williams.
• May 2018: 50,000 registered participants receive ICP utility tokens in an airdrop.
• August 2018: Dfinity announces raise of $102 million from accredited investors and venture capital firms.
• December 2020: The Internet Computer's alpha mainnet launches.
• May 2021: The Internet Computer is launched into the public domain. Internet Computer Protocol (ICP) tokens are available on exchanges, and working dapps include Enso, a decentralized exchange (DEX) and DSCVR, the IC’s answer to Reddit.

How does the Internet Computer work?

In many blockchain-based projects, the transaction verification process relies on mining, a process that is energy-intensive and can be slow.

Dfinity uses a variation of the proof of stake algorithm (called Threshold Relay) to achieve consensus. In Dfinity’s version, nodes produce a random number, called a “random beacon.” This is used to select the next group of nodes and to drive the platform’s protocols. This mechanism is called the Threshold Relay Consensus model, and is one of the key pieces in Dfinity’s arsenal.

But the Internet Computer’s secret sauce is "Chain Key Technology," which splits smart contract function execution into two types: "update calls" and "query calls.” This is what allows for super-fast transactions.

Meanwhile, the Internet Computer’s Network Nervous System (NNS) manages everything from its economics and upgrades to onboarding independent data centers and dedicated node machines.

What is the ICP token?

The ICP token provides gas for the network and allows holders to vote on the proposals that will shape the future of the Internet Computer. Users create "voting neurons," which enable them to either vote manually, or automatically by configuring their neuron to follow other neurons.

ICP is available to trade at a number of exchanges, notably being listed on Coinbase Pro immediately upon its launch. It's also listed on Binance, OKEx and Huobi Global, among others.

Advantages

• 📈 Infinite scalability.
• 🔐 Security—Dfinity claims it has a system of checks that are superior to Ethereum’s.
• 📁 Compatible with smart contracts so decentralized applications (dapps) can be built on the platform.
• 👨‍💻 Highly experienced team.

Disadvantages

The protocol is not battle-hardened, and critics have claimed that there is a fair amount of proprietary code; the blockchain is carefully controlled, and the value of ICP is closely held.

What are Dfinity’s aims?

Dfinity hopes to offer the first blockchain that runs at web speed and can scale to support an infinite volume of computation and data.

The non-profit’s wider focus is on building an open-access Internet; the place where developers build the next generation of mega-applications.

How is the Internet Computer cheaper and more secure than today’s cloud computing?

Dfinity aims to make it possible to build and run an Internet business without having to rely on another enterprise, such as eBay or Facebook.

It uses a process based on sharding to store data cheaply on the blockchain.

Dfinity proposes that the Internet Computer will simplify the process of building and maintaining systems by a reimagining of the IT stack.

The future of the Internet Computer

The cloud computing industry is projected to reach $1 trillion by 2026. Dfinity has received almost $101 million in funding, so can support third-party teams that want to build applications, tools and protocols for the platform.

Dfinity has an ambitious 20-year roadmap; to kick things off, in May 2020, the Dfinity Foundation announced a $200 million fund to attract developers to build on the project.

Several dapps are up and running on the Internet Computer already. They include Enso, a decentralized exchange (DEX), and DSCVR, a social network that resembles a decentralized version of Reddit.

If developers believe it’s the place to build and users take to decentralized systems, as stakeholders they will have an incentive to ensure the system stays simple and cost-effective.

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