Coin Spotlight
18 Feb 2022

Internet Computers (ICP) in Spotlight

Deepan Datta

Internet Computer (ICP) is one of the hottest crypto coins in the market, and from the day of its launch, it has been making headlines.

The token was released to the public for trading in May 2021 at $630, giving the project a market capitalization of $45 billion. The price of ICP tokens has crashed by more than 90%, but it has not lost its mojo and is still managing to attract many investors.

Dfinity Foundation, the company that created the token, aims to make it the world’s first decentralized censorship-resistant internet, hosting Web 3.0 applications, DeFi, GameFi, NFTs, social media, metaverse, and so on.

Let’s check out the project in detail.

Key Metrics

  • Coin Rank: #35
  • Coin market capitalization (as of 18th February 2022): $4.13 billion
  • Coin dominance: 0.22%
  • Coin economics: Inflationary
  • Coin inflation rate: 10% and will be adjusted to 5% over the period
  • Coin circulating supply: 477 million ICP
  • Coin total supply: 207 million ICP

Technical Analysis: ICP Token Price Analysis

ICP in spotlight
source: tradingview.com

The ICP token has been underperforming in the market since its launch and has failed to make a breakthrough. Currently, there is hard support at $20.03 (₹1,542), and it is smartly holding its spot in the region.

To mark a trend reversal and initiate fresh new buyings, it needs to clear multiple resistance levels—$24 (₹1,775), $28 (₹2,212), and the 100-day EMA slope.

However, as the overall crypto market continues to trade in a sideways direction, ICP might follow a similar trend in the short to medium term.

A Brief History of ICP

ICP was launched in May 2021 by Dfitnity Foundation, which was founded in 2016. It is backed by some of the leading Virtual Capital investors, including Andreessen Horowitz, Polychain Capital, and Amino Capital, among others.

The primary objective behind its launch was to create a new kind of decentralized internet and globally-accessible public blockchain network that can run smart contracts at web speed.

The current internet system is powered by cloud computing networks, which are centrally located data servers. This creates a lot of bottlenecks around privacy protection for users, and a single point of failure can lead to a total collapse of the internet network.

So how does the ICP plan to achieve a total decentralized interest system? It aims to decentralize the internet through an open blockchain network, where node machines are run by independent parties and are geographically distributed. The nodes run the ICP, which is an advanced cryptographic fault-tolerant protocol that ensures smart contracts on the protocol cannot be tampered with or manipulated. The smart contracts in the ICP network are called “canisters”.

The network’s nodes and subnet blockchains are interconnected using chain key cryptography, allowing canisters hosted on other nodes or subnet blockchains to interact. This gives the network the scaling ability of millions of nodes.

Further, the ICP can process 2,50,000 queries per second with a 1-second transaction finality. And the storage cost on the network is no more than $0.46 per GB per month.

In simple words, ICP democratizes the internet, so that web developers don’t have to depend on dedicated centralized servers. The data will be stored in an encrypted form, moving between servers owned by millions of participants worldwide and acting as independent data centers. And fees on the network are based on the network’s computing power usage.

ICP creates a perfect platform for launching various next-generation Web 3.0 applications, DeFi, NFTs, metaverse, social media, and so on.

ICP Governance Mechanism

ICP uses a permissionless governance system called the Network Nervous System (NNS). The NNS runs completely on-chain and decides on various technical functions and updates to facilitate the network’s smooth functioning. Anyone can participate in the governance process by staking ICP tokens and creating an NNS neuron.

ICP Tokenomics

ICP is an inflationary token, and there is no limit to its token supply. At present, there are 471 million ICP tokens, of which only 134 million are circulating supply.

The initial inflation rate of the coin was 10%, but the ICP will adjust the inflation rate to 5% over the period.

However, don’t miss the deflationary angle of the tokens. To run the software canisters on ICP, the developers need to pay in Cycles—a kind of stablecoin that powers the network. In the process, the Cycles are burned by the network. You can buy Cycles by exchanging your ICP tokens on the network.  

So, as the network usage increases, more Cycles will be burned, indirectly taking out the supply of ICP tokens from the market permanently. Thus making it a bit deflationary.

To date, over 18,000 ICP tokens have been burned. A small number, but over the long term, if the network usage grows, it will help close the gap between the inflation and deflation rates.

Future Growth Prospects

ICP may look weak on the technical price charts but is a promising project that can revolutionize the internet. Since its launch last May, it has created over 557 million blocks, more 35,000 canisters have been deployed, and as of 31 December 2021, the total value locked on NNS DAO has crossed $6.8 billion.

Difinity’s ICP is one of the most actively developed and well-managed crypto projects globally and has the potential to become the world’s largest blockchain network.

Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.

writer

Deepan Datta

Content Writer

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