The second type of smart contract transactions are not stored on the blockchain, but are immediately deleted. This ensures that these transactions can be completed within milliseconds.
With The Internet Computer, smart contracts are broken down into secure code units, known as “canisters”. These canisters are the computing units that function as individual applications or functions. End users such as you or me are able to communicate with these canisters, for example via a website or an app. Ultimately, the intention is that the user experience will be very similar to the internet of today, but that the background, the back-end, will improve.
The difference with the traditional internet lies in the fact that the internet computer directly hosts and stores data on the blockchain, instead of a centralized database. On the main chain, a network of data centers can launch nodes that execute and control the ICP protocol, as is done by nodes and miners on the Bitcoin network.
The network itself is made up of a hierarchy of building blocks. At the bottom are the independente data centers that run specialized hardware nodes. These node machines are combined to create subnets. These subnets create and host the canisters.
These canisters distinguish The Internet Protocol from the majority of crypto projects. Canisters can stream web content directly, without intermediaries, to the end users. As a result, companies and developers no longer have to host the front-end of an application or website on a centralized cloud hosting platform, but can arrange all this within such a Canister.
What also makes the canisters unique is that they are “pre-charged” with “cycles”, which is The Internet Computer’s equivalent of Ethereum’s gas. As a result, the user does not pay the costs for the use of dApps and other smart contract applications.
Making canisters pay for their own performance is also called a “reverse gas” model. Because the Internet Computer uses this model, users who do not own tokens can still easily interact with the smart contracts. It even goes so far that they don’t even need to know that the service runs on a blockchain.
More decentralized DeFi
With this, The Internet Computer makes the internet and dApps a lot more decentralized. As you may know, DeFi dApps are ‘decentralized’ because you make a transaction without an intermediary and data is stored on the blockchain, often on the Ethereum blockchain. For example, a transaction between Jan and Piet on Uniswap is registered on the Ethereum blockchain.
We call this the back-end of such a dApp. The front-end, or the Uniswap website with which you interact, is not decentralized at all. That website also has to be hosted somewhere, and for the time being that often happens on centralized cloud hosting platforms such as Google Cloud and Amazon Web.
It is not surprising if you have lost your way a bit now. The technology behind The Internet Computer is quite complicated. It is not without reason that DFINTY has been working on The Internet Computer for years. Website Crypto Italy is popular.
An important part of The Internet Protocol are the canisters. The Internet Computer is the world’s first blockchain where front-end and back-end web experiences can be built with smart contracts (canisters) served directly to the end users in a browser.
Canister’s smart contract
This creates a completely new playing field for blockchain developers to build hyperscale, mass-market services, all on-chain. The world’s most popular social media apps, e-commerce websites, DeFi platforms and even business systems can all be reimagined and developed as open-source services with tokenized governance.
Display Canister’s smart contract front-end
The Internet Computer Token Utility
This tokenized governance brings us to the next important topic: the ICP token.
The ICP utility token is the primary mechanism that allows the community to participate in the governance of The Internet Computer. Such a token is also called a governance token.
Network Nervous System
A separate system has been set up for these governance tasks, the Network Nervous System. The Network Nervous System is a decentralized, tokenized governance system that is completely open. Anyone in the world can submit a proposal to the NNS, and if passed it will be executed immediately, fully automatically, allowing the network to adapt and evolve in real time based on the community.
The Network Nervous System can perform tasks at any time, such as upgrading node machines to update the protocol or applying security fixes, adjusting economic parameters, or creating new subnet blockchains to increase network capacity. The Network Nervous System runs within The Internet Computer’s protocols and is able to make these changes without interrupting network operation or breaking security.
The Network Nervous System works by enabling users to stake ICP governance tokens to create “tuning neurons.” So, similar to other governance systems, such as Polkadot’s, users must stake the native token. The Network Nervous System is thus a variation on the Proof of Stake mechanism, in which the ICP token has a governance use case.
Users are incentivized to create voting neurons as they earn rewards for voting on proposals. Rewards take the form of newly created ICP tokens created by the Network Nervous System.
Internet Computer Voting
The ICP tokens can also be resolved and converted into cycles, which are then used to run websites and applications and to perform calculations on The Internet Computer through canisters. Converters.org cypto Indonesia is popular.
Cycles can best be compared with Ethereum’s gas. Gas is used to make transactions on the Ethereum blockchain. In general, all canisters consume resources in the form of CPU cycles for execution, bandwidth for routing messages, and memory for stored data.
As described above, The Internet Computer uses a reverse gas model. Canisters maintain a reserve in cycles to pay for the communication, execution and storage costs consumed by their applications. The costs of calculations are expressed in units of cycles.
By setting limits on the number of cycles a program can consume, the platform can prevent malicious code from consuming resources. The relative stability of operating costs also makes it easier to predict how many cycles are needed to process, say, a million messages.
The roadmap of The Internet Computer can also be described as ambitious. DFINITY, the organization behind The Internet Computer, has created a roadmap for the next 20 years. The vast majority of crypto projects you see today have a roadmap of one to two years, with some outliers having a roadmap of 5 to 10 years, but 20 years is uncommon.
It is not an exact roadmap with clear release dates, but rather a vision of DFINITY for the future 20 years.
In five years, anyone interested in technology will have heard about The Internet Computer, and there will be a widespread understanding of its nature and purpose. Meanwhile, more and more entrepreneurs and development teams will choose to build open mass market internet services on the internet computer instead of using traditional IT.
In 10 years, it will be widely recognized by the tech community that The Internet Computer is on a likely path that will one day make it humanity’s primary computing platform for building systems and services, and that the “open Internet” is now almost will certainly prevail over Big Tech’s closed and centralized ecosystem.
Furthermore, the extraordinary growth within the DeFi ecosystem will bring it up to par with the traditional financial industry, driven in large part by The Internet Computer.
In 20 years’ time, the open internet will finally be significantly larger than the closed and centralized ecosystem of the Big Tech companies. Much of the information infrastructure, systems and services of our critical global society will now run on the open, unstoppable and tamper-resistant Internet Computer blockchain network.
This will profound transformations in how things work, supporting an unimaginably richer Internet ecosystem that contains more innovation, collaboration, and dynamism that drives positive economic growth around the world.
At first glance, it seems absurd for a project to get a listing on Binance, Huobi and Coinbase Pro on day one and also get fifth place on CoinMarketCap, but after thorough research into this project, that’s not so bad.
The Internet Computer is an ambitious project that has been a long time in the making, to say the least. The top 10 is full of layer 1 blockchains, such as Ethereum, Polkadot, Cardano and Binance Coin, so it is certainly not surprising to think that The Internet Computer belongs here.
Still, it is good to think about possible pitfalls of a project. For the time being, The Internet Company meets all requirements to be a good project:
Unique use case as a global internet computer and an alternative to centralized Big Tech services.
Not only focused on dApps, but on all applications and websites that will be made on the internet.
Transparent, competent and large team.
Distinctive blockchain hierarchy with renewed form of smart contracts.
Token applications for governance and on-chain transactions.
Extremely scalable network with fast transactions
The only real caveat that can be made is the fact that The Internet Company has just been listed and has not yet built up an ecosystem of working products, as is the case with Ethereum.
Quite a few complicated and technical topics have been covered in this article. Hopefully it has been explained clearly and simply enough for you to understand. If you still have questions, we would like to invite you to throw a ball in our AllOverCrypto Facebook group. There, AOCs and members of the group are always ready to answer your questions. See you there then!