Even in the innovative world of crypto, it’s rare to come across a project as wildly ambitious as Dfinity’s Internet Computer.
Apparently, this is only the start. According to Dfinity’s website, the aim is for the Internet Computer to be the platform upon which every web service is built, challenging the power of major service providers like Facebook, Amazon and Google:
The Internet Computer provides a means to reverse Big Tech’s increasing monopolization of internet services, user relationships and data, and restore the Internet to its permissionless, innovative and creative roots.
How does it work?
So now you’ve heard the pitch, let’s look at the how.
The Internet Computer is sometimes referred to as “Ethereum’s Crazy Sister” because, like Ethereum, it provides the underlying infrastructure for smart contracts to be built and executed.
Unlike Ethereum, however, the Internet Computer won’t require users to own any crypto. Instead, services work by using a reverse gas model where smart contracts pay their own computation costs using ‘cycles’ uploaded by developers, who buy cycles using ICP.
Developers build programmes and upload them into ‘canisters,’ on the Internet Computer which can be accessed by users. Dfinity has already created decentralised versions of LinkedIn and TikTok to showcase how existing web services can be reimagined using blockchain technology.
Advantages of the Internet Computer
Dfinity’s founder, Dominic Williams, hopes that an accessible, secure and open internet, based on novel blockchain technology, will encourage people to abandon existing IT in favour of smart contracts. He told Forbes:
The advantages of smart contracts are that first of all they are tamper proof so when you build on the Internet Computer they’re secure by default. That’s very different to building on traditional IT where everything you build is insecure by default and you have to protect it.
A major selling point for the Internet Computer is its ultra-fast, tamper-proof blockchain which uses a novel consensus mechanism to verify transactions at speed.
There are four layers to Dfinity’s consensus mechanism. A Random Beacon selects a committee, made up of registered clients, to ‘notarize’ a new block. The Notarization process provides near-instant finality to transactions which can be executed at speed without requiring network-wide consensus.
The Blockchain layer is deployed if two or more blocks are proposed at the same height. Like traditional blockchains, heavier chains receive the most weighting thanks to a “probabilistic slot protocol” which resolves forks.
ICP’s initial trading price of $700.65 exceeded the perpetual funding rate quoted by FTX ahead of Monday’s launch, which valued ICP under $200.
In part, a high initial price reflects strong fundamentals. ICP is a highly-anticipated and well-funded project, receiving $102 million from investors back in 2018. Price could also be inflated by ICP’s initial listing on Coinbase.
Research by Messari’s indicates that tokens on Coinbase see average returns of +91% after the listing is announced.
Investors should be wary that as well as offering the highest average returns, tokens listed on Coinbase also see the greatest variance in returns. In the past 24 hours the price of ICP has swung between highs of $700.65 And lows of $250.31, falling to $398.40 at the time of writing.
Ultimately, the price of ICP will depend upon the ability of the Internet Computer to out-perform its competitors in the crowded crypto space and beyond.
Dominic Williams, for one, is certain the Internet Computer will succeed in pushing Big Tech into “terminal decline.” He claims that in 20 years time:
Much of our crucial global society’s information infrastructure, systems, and services will now be running on the open, unstoppable, and tamperproof Internet Computer blockchain network.
This optimism could prove misplaced. While Dfinity hopes to offer storage solutions, social media platforms and video streaming sites to its users, many crypto projects already offer decentralised alternatives to popular web services.
Dfinity may need to team up with its various competitors in the crypto space if its ambitions of taking on Big Tech are to be realised.