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What is the Internet Computer — the Dfinity Project at a Glance

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What is the Internet Computer — the Dfinity Project at a Glance

On May 7, 2021, DFINITY’s Internet Computer was presented to the general public at a launch event. As a so-called blockchain computer, the Internet Computer is intended to become the logical next step alongside smart contract platforms and payment systems and represent another pillar in the crypto world. A few days after the launch, the new ICP token went on the market and promptly triggered a hype. Reason enough to take a closer look at the Swiss crypto company and the Internet Computer.

Already since 2016, the Zurich-based DFINITY Foundation has been working on the Internet Computer. Dominic Williams founded the non-profit organization. The goal was to create a decentralized Internet by bringing together mathematicians, programmers, cryptographers, and database experts. Currently, the Internet is formed from proprietary ecosystems, which are in the hands of large corporations. Internet Computer’s approach represents a kind of blockchain computer on which developers and companies can develop, use and manage software and systems. After Polkadot, DFINITY raised the second most capital upfront. About $121 million went into the development of the internet computer.

DFINITY’s first major product is not a classic payment system, nor is it a platform familiar with Ethereum (ETH) or Cardano (ADA). Rather, the project is reminiscent of a decentralized cloud, which provides data and applications on the one hand and is managed by the community via a governance system on the other. Most crypto projects are intended to solve problems in blockchain technology; the Internet Computer is intended to eliminate existing problems on the Internet with the help of the blockchain.

Basically, this idea is not new. Already Ethereum gained great notoriety in its early phase, as it was advertised as a world computer. Today, Ethereum is undoubtedly one of the most important platforms in the crypto world, although the focus is clearly on the market shares in smart contracts, NFTs and DeFi. Founder and current Chief Scientist Dominic Williams has long-term plans to form a decentralized counterpart to giants like Amazon Web Services (AWS), Google, and Facebook. As a central entity, these companies can change the parameters of how their platforms are used on the Internet at any time and influence the companies that rely on the monoliths’ products.

The Internet computer in detail — this is what is behind the project.
As mentioned before, big companies control the Internet. The past has shown that the decisions of these companies can decide about the conduct of other companies and us users. Google bans all services on Huawei smartphones. The popular online game Fortnite is suddenly kicked out of app stores, and big players like Zynga get into serious trouble after strategic decisions by Facebook. The Internet Computer starts at this point and creates a user-driven system that encourages new and innovative technologies as a logical consequence.

In this way, it should be possible to eliminate the platform risk that exists with centralized platforms. The Internet computer should also run at web speed and be unconditionally scalable. To realize these two characteristics, the Internet Computer, similar to many other crypto projects, is based on a network of distributed nodes. The difference is that DFINITY bases its system on a series of high-performance data centers.

In total, 12 independent data centers in 7 subnets with 68 individual nodes support the Internet Computer. Immediately after the launch of the mainnet, the number of data centers and nodes is expected to increase gradually. By 2021, there should already be 123 data centers and 4,300 nodes. Those behind the project assume that this rapid increase will be necessary due to rapid acceptance in the crypto world.

On May 7, during the launch event, the mainnet went live after about five years of research. Three days later, the ICP token started trading.

As previously indicated, the Internet Computer was developed to create a decentralized platform analogous to the classic Internet. The Internet Computer is based on a protocol whose source code is now public. Conceptually, the Internet Computer is composed of hierarchically structured building blocks. Individual data centers host these. The validity of the blockchain is ensured by individual nodes, which are located in a subnet.

Individual building blocks mentioned are under the control of multiple subnets. In this context, the distributed nodes guarantee a tamper-proof blockchain through fixed responsibilities. Part of these responsibilities are also so-called canisters (German: Canisters). These canisters are to be understood as bundles of software written in a higher programming language. Among others, the Internet Computer masters the programming language Rust or DFINITY’s own programming language Motoko.

As mentioned before, big companies control the Internet. The past has shown that the decisions of these companies can decide about the conduct of other companies and us users. Google bans all services on Huawei smartphones. The popular online game Fortnite is suddenly kicked out of app stores, and big players like Zynga get into serious trouble after strategic decisions by Facebook. The Internet Computer starts at this point and creates a user-driven system that encourages new and innovative technologies as a logical consequence.

In this way, it should be possible to eliminate the platform risk that exists with centralized platforms. The Internet computer should also run at web speed and be unconditionally scalable. To realize these two characteristics, the Internet Computer, similar to many other crypto projects, is based on a network of distributed nodes. The difference is that DFINITY bases its system on a series of high-performance data centers.

In total, 12 independent data centers in 7 subnets with 68 individual nodes support the Internet Computer. Immediately after the launch of the mainnet, the number of data centers and nodes is expected to increase gradually. By 2021, there should already be 123 data centers and 4,300 nodes. Those behind the project assume that this rapid increase will be necessary due to rapid acceptance in the crypto world.

On May 7, during the launch event, the mainnet went live after about five years of research. Three days later, the ICP token started trading.

As previously indicated, the Internet Computer was developed to create a decentralized platform analogous to the classic Internet. The Internet Computer is based on a protocol whose source code is now public. Conceptually, the Internet Computer is composed of hierarchically structured building blocks. Individual data centers host these. The validity of the blockchain is ensured by individual nodes, which are located in a subnet.

Individual building blocks mentioned are under the control of multiple subnets. In this context, the distributed nodes guarantee a tamper-proof blockchain through fixed responsibilities. Part of these responsibilities are also so-called canisters (German: Canisters). These canisters are to be understood as bundles of software written in a higher programming language. Among others, the Internet Computer masters the programming language Rust or DFINITY’s own programming language Motoko.

The canisters can contain all kinds of software or code. These can include websites, decentralized applications, security systems, or entire enterprise software. The size does not matter because the system provides a corresponding number of canisters depending on the size. Huge software programs would sometimes also be distributed to millions of canisters, and the respective status of these canisters is replicated to all nodes.

In a way, DFINITY’s canisters can be understood as a kind of operating system. An operating system can create, process, and output data but also communicate with devices. In the case of the Internet Computer, publicly specified APIs are available to the canisters for these tasks. In this way, they can communicate, interact and manage each other. However, the APIs also enable specific tasks, such as making payments or managing permissions.

The number and composition of subnets can be adjusted if necessary. Reasons for this can be, for example, adjustments in the area of scalability or new functions in the protocol. The system can decide for itself when to add a new subnet or expand an existing one. For this purpose, the developers created the Network Nervous System — NNS for short.

The NNS is based on an independent algorithm, which forms the governance system of the Internet computer. It is comparable to the work of a central nervous system and considers all aspects of the network. The more nodes there are in a subnet, the more robust it is. The tasks of the Network Nervous System include:

Creation and management of subnets

Reaction to changes and activities in the network (load, inconsistencies, attacks)

Updating protocols and software on individual nodes

Defining economic parameters of how expensive it is for users to use computing power on the network

Infrastructurally, the NNS is based on two important canisters. One is the Registry Canister. The other is the Governance Canister. The Registry Canister stores the entire configuration of the Internet computer and delivers it on demand. The Governance Canister stores current proposals and neurons (explained in more detail later). It also defines which users are allowed to participate in voting.

The DFINITY Foundation itself advertises that the Internet Computer will have web speed. Dominic Williams states that there is no upper limit for the block rate in the system. At the launch of the Mainnet, the Internet Computer will have a rate of one block per second (BpS). By the end of the year, the block rate is expected to increase to 1,000 BpS. These aspects provide a novelty, as such scaling does not exist in classical systems. This has been achieved through Chain Key Technology (CTK).

This technology enables the Internet computer to complete transactions and update data independently. Chain Key Technology is based on various protocols that assign a single public key to the system. This allows other systems or devices to verify the authenticity of the blockchain in seconds. In addition, the CTK can transfer canisters to other canisters that are on the same subnet. This approach is already known in a modified form from Polkadot’s hub-and-spoke model.

Since the Internet computer is based on many distributed systems, a common consensus is essential. Each machine on the network must reach a consensus on what data and input to take and what order. The canisters with the software applications are distributed over many nodes, which at the same time also provide a respective status. The majority of the reported status messages finally form the consensus. In this way, malicious or manipulative nodes can be excluded from the system.

According to the previous explanations, the technical background and the general goal of the Internet Computer are clear. But what are the real intended uses? Basically, it can be used for Internet services of all kinds, DeFi applications, websites, and much more. In the long run, however, the blockchain computer is intended to create decentralized alternatives to established applications of the Internet.

The cryptographic security of the Chain Key Technology can also be used for a special ID, which can be used across the board. In the long term, the Internet computer will create decentralized alternatives to Facebook, AWS, Facebook, and other applications such as WhatApp or Tiktok.

The DFINITY Foundation caused a stir in advance by raising the second most capital after Polkadot. In total, the company convened three funding rounds and one airdrop. The funding of the project is quite special in parts and describes the innovative approaches of DFINITY Foundation in all facets:

The first round of funding took place at an early stage of development. In February 2017, the DFINITY Foundation, in its founder Dominic Williams, put out a tweet advertising the funding round. Some 370 participants funded the project to the tune of $16 million. The nonprofit invested some of that money in Bitcoin (BTC) and Ethereum (ETH). During the bull run in 2017, DFINITY said it could generate the equivalent of about $40 million from its investments.

This funding round was originally set as the main round — i.e., analogous to an Initial Coin Offering (ICO). However, after the entire crypto market subsequently grew, the set valuation became too low. Concerned about securities law issues. However, the DFINITY Foundation did not want to conduct an ICO. Early investors were therefore given incentives, which would take effect as the project continued to develop. These include, among others, almost 25 percent of the tokens, which will be launched on the market at the start of the mainnet.

Almost a year later, a strategic financing round followed, in which primarily venture capitalists participated. From well-known giants such as Andreessen Horowitz, CoinFund, Polychain Capital, and Greycroft, 20.54 million US dollars were raised. Polychain and DFINITY also established the “DFINITY Ecosystem Venture Fund” at this time to fund later-stage developers related to Internet computing. While the venture capital of over $20 million is confirmed, many media outlets reported over $60 million raised by DFINITY. However, it is considered likely that this sum includes the deposits in the aforementioned fund.

The third round of funding represented a private sale and was special in that early investors will automatically receive tokens in the future once the mainnet is launched. On May 10, 2021, the payout of the new ICP token began. The 110 participants in the third round of funding raised a total of $97 million.

A planned May 2018 airdrop distributed 0.80 percent of the initial token offering. These tokens (then known as DFN) had an equivalent value of $35 million. Early supporters of the project were beneficiaries of the airdrop.

After the new ICP token went on sale on May 10, 2021, it created a lot of hype. Within a few hours, the token rose to the top 10 of the largest cryptocurrencies by market capitalization. The ICP token fulfills several tasks at once. These include governance in the network, rewards for high activity, and functioning as a gas token. Below, we explain each function in detail.

Users can lock their ICP tokens in the NNS to create so-called neurons. These neurons can be used for voting in the network. Particularly active users receive a bonus for their votes, which can be paid out in ICP tokens. The conversion into neurons can be determined by the user himself in the form of a resolution phase. The longer this phase is set, the higher the voting rights of the respective neurons. The rewards are also many times greater.

This approach is similar to Curve Finance, where stakeholders increase their voting rights after a lock-up period of up to four years. The resolution period can be increased but not decreased. To unlock a Neuron or the corresponding ICP tokens, a countdown can be set. This is currently between six months and eight years. The Network Nervous System also allows the election of delegates to participate in votes automatically.

The ICP token also represents a reward system for particularly active users in the network. This includes not only participation in voting but also the provision of computing capacity. Operators of nodes receive a computing reward for being part of the network and replicating the data.

The ICP token also serves as fuel for the creation of Cycles. Canisters use Cycles and must be charged with them. The Cycles then burn up again during the computing and storage processes. Thus, the higher the computational effort in the system, the higher the demand for ICP tokens to be burned. Unlike Ethereum, however, users do not pay these gas fees. Developers top up their Canisters with Cycles, which is reminiscent of the way Amazon’s cloud service AWS works. Again, developers on the platform pay to use the service. Cycles are also designed as stable coin. This allows high fees to be avoided, even if the ICP token fluctuates greatly in value.

The supply of the new token amounts to 469,213,710 ICP at the Genesis Launch. 9.5% of the tokens were distributed to early contributors to the project. The DFINITY Foundation itself holds 23.86%, and team members hold another 18%. The following list shows the distribution of the token.

24.72 % went to investors from the first financing round in February 2017

The DFINITY Foundation itself holds 23.86 %

18 % goes to the nearly 200 team members

9.5 % goes to about 50 people who supported the project in an early phase

7.0 % goes to investors from the second round of financing

4.96 % go to investors from the third round of financing

Internet Computer has the ambitious goal of becoming the third major pillar in blockchain technology. Alongside blockchain platforms and payment systems, the Internet Computer is intended to function as a blockchain computer. In detail, this means that DFINITY’s Internet Computer is to be understood as a kind of decentralized Internet. Decentralized applications, websites, and entire enterprise systems can be operated on this platform.

The potential of the Internet Computer is undisputed. The DFINITY Foundation raised the second most venture capital after Polkadot, and the launch of the mainnet was highly anticipated. The ICP token created hype at the start of trading and rose directly into the top 10 of the largest cryptocurrencies by market capitalization.

Should the responsible developers around founder Dominic Williams implement the planned project and the Internet computer find appeal, the project could actually be the third major pillar alongside Bitcoin and Ethereum. However, it will probably be some time before this happens.

DFINITY’s Internet Computer is a kind of decentralized internet, which is to be understood as a cloud platform. It enables the secure and decentralized execution of applications, websites, and systems via the blockchain.

The DFINITY Foundation from Zurich is behind the project. The organization manages numerous data centers around the world and spent 5 years researching the Internet Computer?

The ICP token has been available for purchase on all major exchanges since May 10, 2021. Among them are Huobi, Coinbase Pro, OKEx, and Binance.

I share more intimate thoughts in a monthly newsletter that you can check out here. Please let me know in a comment, and let’s build your crypto universe via Patreon. Join me on various social media platforms:

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Source: https://l-wiesflecker.medium.com/what-is-the-internet-computer-the-dfinity-project-at-a-glance-4fa0f389022e?source=rss——-8—————–cryptocurrency

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