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Internet Computer is a blockchain project that aims to become a “world computer” through the provision of cloud functionality via a decentralized network of data centers that can act as an alternative to centralized web systems.
What is Internet Computer (ICP?)

Internet Computer, powered by the Internet Computer Protocol (ICP, which is also the token ticker), is a blockchain-based environment for decentralized applications and smart contracts designed to scale and run at web-comparable speeds. The overall idea is that a developer can deploy an application on Internet Computer without having to rely on centralized providers of traditional IT services such as cloud computing, web servers, or database hosting.

The design of Internet Computer goes some way further in the decentralization effort than many other smart contract platforms where only certain activities, such as asset transfers and accounting, are handled on-chain. Other parts of the app, such as the back-end data or web hosting, are typically outsourced to centralized IT providers such as AWS.

Therefore, Internet Computer claims to occupy a unique space in the blockchain sphere since only dApps that run on its platform can operate without reliance on centralized services.

How was Internet Computer developed?

Internet Computer is the brainchild of cryptographer and entrepreneur Dominic Williams. In 2016, Williams established the DFINITY Foundation, a Swiss non-profit, to focus on the research and development of Internet Computer. The Foundation hired reputable developers to work on the project, including Timo Hanke, a mathematician and cryptographer formerly of Aachen University in German, who also created a protocol to increase Bitcoin mining efficiency, and Andreas Rosberg from Google, who co-invented WebAssembly.

The project managed to attract a significant amount of capital during its early years, raising over $100 million in 2018 alone from investors including Andreessen Horowitz and Polychain Capital.

Internet Computer launched on mainnet in May 2021. As of May 2024, the network consisted of close to 1,500 nodes.

How does Internet Computer work?

On a high level, the Internet Computer Protocol acts as a networking protocol that allows data centers from across the globe to pool their resources into a decentralized cloud service provision. Dapp developers can build their projects on Internet Computer under the Reverse Gas Model, which requires developers to pay fees at the rate set by the protocol. This is a key innovation, and it enables end users to engage with dapps without paying fees. The user fee model is a point of friction in the traditional blockchain model, so Internet Computer aims to eliminate this requirement and thus promote mass adoption.

Apps on Internet Computer are publicly available on the Internet for users and are theoretically scalable to any size or use case, including finance, social media, gaming, and more.

To enable this, the Internet Computer Protocol uses several innovations.

Structure and nomenclature

The Internet Computer network consists of data centers distributed across the globe, with each center operating a node machine that’s part of a subnet, or independent blockchain operating as part of the larger Internet Computer. Subnets host smart contract canisters containing data and code.

More on these terms is explained below.

Chain key cryptography

The Internet Computer protocol runs on a novel cryptographic framework called “chain key cryptography,” which relies on just a single public key to verify artifacts from the Internet Computer. This makes verification far quicker than in standard blockchains, enabling Internet Computer to operate at much greater speeds than legacy platforms.

Subnet blockchains

The Internet Computer network allows for the formation of subnet blockchains by a set of nodes. Subnets are capable of potentially limitless integration with one another, enabling scalability. Subnets can be thought of as a kind of sharded structure, or similar to how parachains work in the Polkadot ecosystem, except on the Internet Computer any smart contract on any subnet can directly communicate with any smart on any other subnet. New nodes can be added, and new subnets easily formed, thanks to the shared public key enabled by chain key cryptography.

Network Nervous System (NNS)

The Network Nervous System (NNS) is the tokenized governance protocol of Internet Computer. It’s run by a decentralized autonomous organization (DAO) operating within a master subnet blockchain, and maintains the overall subnet structure, issuing instructions to nodes about the formation of subnets and keeping records. This role is facilitated by Internet Computer’s chain key cryptography.

Canister smart contracts

A legacy blockchain such as Ethereum allows the programming of smart contracts, where the contract itself only contains the code, and the state of the blockchain is updated as transaction data. In contrast, Internet Computer uses so-called “canisters” which contains data and code, enabling them to run in parallel to one another rather than having to be processed sequentially so that the blockchain state can be updated in order.

Canisters can therefore extend standard smart contract functionality – for instance, a canister can generate transactions across multiple blocks, or even create an entirely new canister automatically. Internet Computer also allows smart contracts to interact with other blockchains such as Bitcoin or Ethereum – for instance, by creating new addresses for sending and receiving BTC.

Further, ICP’s Chain Fusion Technology allows secure multi-chain interoperability without centralized bridges.

Decentralized AI

The scalability and capabilities of Internet Computer open up the potential of decentralized AI, which involves running AI algorithms entirely on-chain. The rise of AI under centralized service operators has given rise to unresolved questions around issues such as ensuring the integrity of the underlying data, the transparency of the training models, and whether centralized infrastructure will be able to cope with the scale of increased demand.

Running AI models on-chain introduces unprecedented transparency, with the ability to verify inputs and trace the development of outputs. While legacy blockchains can’t match the resource requirements of AI, Internet Computer foresees that it will be set up to meet such demand. Currently, it can handle small AI models such as image classification, and development is focused on increasing this capability to larger models.

However, the project’s long-term roadmap aims to enable smart contracts to perform AI computations on GPUs, ultimately offering end-to-end on-chain support for large models.

How is ICP used?

ICP is the native token of the Internet Computer Protocol. It’s used for three main purposes.

Network governance

Holders of ICP can stake their tokens to generate “neurons,” allowing them rights to vote on matters within the NNS. Neurons also enable someone to submit a new governance proposal. The NNS also operates an incentive system where users are rewarded for their participation.

Generating “cycles” for operating the Internet Computer

Cycles are the means by which ICP value is converted into services on the Internet Computer. A developer deploying a canister must use ICP to purchase “cycles” that provide enough resources – whether that’s computational power or storage space – to run the canister to completion.

Cycles are priced in SDR, a reserve asset with value pegged to a basket of fiat currencies. The ICP protocol that the price of one trillion cycles is fixed at 1 SDRs worth of ICP tokens.

Protocol rewards

ICP is also used to remunerate node providers for their contribution to the Internet Computer network.

Internet Computer Protocol essentials

  • Internet Computer aims to replace centralized eb services with a decentralized network of independent data centers
  • Internet Computer allows developers and entrepreneurs to build their services and applications entirely on the blockchain.
  • Internet Computer opens up the possibility of decentralized AI, with AI models running as smart contracts.
  • The Internet Computer Protocol stack comprises innovations like chain key cryptography, a subnet architecture, and canister smart contracts capable of executing complex functionality.

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