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Internet Computer (ICP): What It is, How Does It Work

What is Internet Computer? The Internet Computer is creating a decentralized internet — with independent data centers providing alternative to corporate cloud services.

Source: coinbase

Internet Computer Protocol (ICP) is a set of protocols that facilitate data centers from different parts of the globe to collaborate and provide a substitute to the prevailing centralized internet cloud services. The ICP token is employed for governance (holders can vote for the future of the network), to compensate network members for good conduct, and is used to pay fees for executing transactions.

In May 2021, the cryptocurrency Internet Computer was introduced, rapidly ascending to the top 10 most valuable digital coins, trailing behind established cryptocurrencies like Bitcoin, Ethereum and Dogecoin. Even though its place in the rankings has dropped, it still places within the top 40 of the most valuable crypto coins.

It appears that the world is overflowing with numerous cryptocurrencies, so why is the Internet Computer different? The function and purpose of Internet Computer differs from the majority of other cryptos, so let’s take a look at how this coin works and why it is unique.

What is Internet Computer crypto?

The Dfinity Foundation established Internet Computer (ICP) as a cryptocurrency or digital currency. It is supported by Andreesen Horowitz and Polychain Capital, two highly respected venture capital firms. This token provides users with the capability to generate applications, websites and other web-based services.

Source: crypto-news-flash

Cryptocurrency has the potential to revolutionize the web by allowing for a more decentralized network. This network could potentially host a different set of applications than what is currently available. According to the project’s founder, it could potentially compete against big names like Google, Meta Platforms, and Amazon Web Services.

In the cryptocurrency sector, there are applications for decentralized finance – referred to as DeFi. These apps are designed to replicate, or even substitute, traditional financial procedures through the use of digital currency.

Dfinity states that, due to its decentralized structure, the Internet Computer can enlarge its capacity depending on the amount of demand it has.

It is beneficial to view the Internet Computer as a system that employs blockchain technology in order to operate applications, instead of regarding it as a simple cryptocurrency.

What factors led to the widespread use of the Internet Computer?

The surge in Internet Computer usage has three main reasons:

  • Its incredible potential: The originator of the cryptocurrency has made some bold assertions concerning its capacity to push aside, or at least challenge, the web titans in their powerful positions. These statements include the speed of the cryptocurrency, its capacity to expand quickly, and its potential to greatly reduce computing expenses.
  • Supported by well-known financiers: Andreesen Horowitz is a renowned venture capital firm, while another significant investor (Polychain Capital) concentrates in venture capital for digital currency. The acceptance of esteemed investors brings others to the table.
  • Advertising: Several market analysts proclaimed estimates for the new crypto coin early on, and have anticipated tremendous cost gains in the years to come. Unsurprisingly, this has not put a damper on investors’ excitement at all.

No doubt, the early rise in price for Internet Computer was also attributed to the bullish atmosphere that surrounded cryptocurrencies in 2021. The year was ripe to make headlines and procure resources to maintain a crypto project.

Internet Computer v.s. other cryptocurrencies

Cryptocurrency users often wonder how different digital money is from one another. Internet Computer has its own unique characteristics that make it stand out from other cryptos. These include:

  • It offers the capability for users to generate software on the internet. This technology gives individuals the opportunity to utilize its blockchain technology to construct applications and circumvent the major tech firms.
  • It’s powered by a decentralized system, not the cloud. Different from numerous other blockchains which are powered by the cloud, the Internet Computer works on a dedicated infrastructure formed by independent parties, as mentioned by Dominic Williams, the founder of Dfinity.
  • It works quickly. As opposed to taking up to 30 minutes to complete transactions when using certain cryptocurrencies, Dfinity claims that its cryptocurrency runs at the speed of the web.

Considering Internet Computer anew, it may be beneficial to view it as distinct from the concept of currency as it is commonly understood.

Watch the following video to learn more about Internet Computer (ICP):

Where can you buy Internet Computer crypto?

Although Internet Computer crypto is widely popular, not every broker or exchange may offer the ability to trade it.

However, two of the biggest exchanges do. Coinbase, which went public in 2021, provides users with the option to purchase, sell, switch, transfer or store the digital asset. Similarly, Binance also allows trading of the coin.

Additionally, and numerous other smaller exchanges offer the ability to trade Internet Computer.

In conclusion

The potential advantages of Internet Computer are great, but it is prudent for those trading the digital asset to comprehend what they are purchasing. That is an integral part of risk management when trading cryptocurrencies, which can display erratic cost spikes and can swiftly frighten away those with less trading knowledge. Therefore, it is easy for people to become impassioned and make choices without taking their long-term goals into account.

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