You may have caught a whiff of last month’s explosive climb into cryptocurrencies’ top 10 valuations by a mammoth Swiss-based project to replace the Internet we know today. One crypto analyst described it as perhaps “the biggest launch of 2021”: it could replace the current Internet with something that is “efficient, convenient and safe”. But one month after its launch, Dfinity’s Internet Computer Protocol (ICP) token had lost 80 per cent of its value (LINK).
The current price, however, is a small part of the story.
The pattern of a big bump on launch, followed by a slump, and a slow climb back seems standard for most cryptocurrencies. On launch, venture capitalists take their winnings. First investors also cash in. And those who buy for fear of missing out (FOMO traders) get caught holding the bags of devalued coins (LINK). At the end of the week it was 58% down on the month.
According to analyst “Crypto Guy” on the Coin Bureau’s YouTube channel, ICP investors who bought in the project’s public sale clocked 5,000x gains, though most of these coins are probably locked. Traders who bought tokens in ICP’s first private sale raked up 200x profits.
What bothered Crypto Guy and others was that the voting system to determine what happens on ICP is heavily weighted towards the large, original investors. Ordinary users would have “negligible” influence. Even those creating programs (dapps), who will have to buy “cycles” to run their apps, would have few votes to decide on ICP’s way of working, and these are the only people Crypto Guy could see wanting to buy ICP tokens. Even worse, dapp makers would not be able to reconvert the cycles they buy back to cryptos, even to ICPs.
Who are the people behind Dfinity, the Internet Computer Protocol (ICP) and its affiliated Internet Computer Association (ICA)?
The Dfinity foundation is registered in Zug, Switzerland’s “Crypto Valley”. The Internet Computer Association (ICA) is “a Geneva-based independent members organization that advocates for the Internet Computer network while supporting and coordinating ecosystem participants,” its website explains (LINK). Dfinity says it has R&D centres in Zurich, San Francisco, Palo Alto and Tokyo, with remote teams in places such as Germany and the UK. It declares: “The foundation has assembled a stellar team of nearly 200 from academia, the cryptoverse, and leading technology institutions.”
Before digging deeper into how it works, consider the promise:
Dfinity itself says the Internet Computer is “a computing platform that supports interoperable software, open internet services that can share irrevocable APIs [applications], and transparent, open governance systems. This will transform how the world builds IT systems, including websites, enterprise systems, mass-market internet services, financial systems, governance and legal systems, and more — setting the stage for mutualized network effects that can effectively reboot the internet” (LINK).
As outlined by the cryptonews and decrypt web sites, these are what ICP does that will make a difference (I’ve included links if you want to get into the technical issues):
Speed: Dfinity claims the Internet Computer can finalize transactions in one-to-two seconds. As a comparison, Bitcoin takes around 10 minutes, and Ethereum 15 seconds (depending on network congestion) (LINK).
Decentralization: “A network of machines distributed around the world […] is being put to work running the next generation of mega-applications—decentralized versions of Uber, eBay, Facebook, and more.”
Solving problems: “Today, Ethereum dominates the crypto industry. Dfinity aims to solve the scaling problems experienced by Ethereum without compromising on security or decentralization — something another rival, EOS, has been criticized for.”
Breaking free of big tech: “It aims to take on the $370 billion cloud computing market, and free the world of its dependence on centralized server farms.”
No need for special installs: With a new Dfinity operating system for smartphones, Endorphin, “there will be no distinction between websites, apps and dapps [decentralized programs]. There will be no need for a bothersome download and install process.”
ICP is already running some on its system: “Several dapps are up and running on the Internet Computer already. They include Ensoa, a decentralized exchange (DEX), and DSCVR, a social network that resembles a decentralized version of Reddit”
CoinBureau’s “Crypto Guy”, with nearly one million subscribers, observed on 22 May 2021, 12 days after the public launch: “It really seems to have the potential to replace the Internet we see today with something that is much more efficient, convenient and safe” (LINK). To put the problem with cryptos in a nutshell: today a few techno giants “could crush the crypto market in an instant” if they stop cryptocurrencies from using their services, warns Crypto Guy.
The Internet Computer project could change all that. It “aims to replace the entire Internet stack not just the application layer [of individual programs and services]”. It will do away with the need for legacy IT such as centralized cloud computing services, databases, and firewalls, according to the crypto monitoring site nomics (LINK). In Dfinity’s words, the Internet Computer provides “a revolutionary public network that provides a limitless environment for smart contracts that run at web speed, serve web, scale, and reduce compute costs by a million times or more” (LINK).
In line with these goals, Dfinity has published a roadmap for action stretching over the next 20 years (LINK). It has a claimed $195 million in funding since 2018, from big firms like Andreesen Horowitz, Polychain Capital and others (LINK).
The brain behind the Internet Computer is Dominic Williams, founder and chief scientist at Dfinity. He’s a British-born crypto specialist whose bio says he has a first class Bachelor’s degree in computer science from London University (LINK). He made his name with the massively multiplayer online (MMO) game Fight My Monster, launched in 2011. With several million users, Fight My Monster was a pioneer in its use of distributed computing technologies (LINK).
The nextweb site remarked in 2012: “Fight My Monster [is] a game you may have never played before, given its target audience of boys ranging between the ages of 8 and 13. Just recently [it] raised a $2.1 million funding round and is now expanding its operations from the UK to Silicon Valley. In fact, Fight My Monster is doing so well that its creators claim it’s the fastest growing game for its demographic” (LINK).
The techcrunch site added: “Responding to his sons’ complaints that [the educational MMO game] Moshi Monsters was too girly,” Williams spent 12 months developing his successful alternative. Crunchbase noted his other achievements, too specialized for me to understand, in its bio. All indicate he “pioneered new approaches to cryptography and blockchain technology” (LINK). On YouTube Williams said he came to the Internet Computer idea when researching how to create a cryptocurrency that could be used by the games industry but realized that it could lead to something much bigger (LINK).
Dfinity’s other nerds (his word for himself) include a former mathematics and cryptography professor who created a program to increase the efficiency of Bitcoin mining, and two ex-Googlers with programming achievements(LINK).
The Internet Computer uses a new programming language known as Motoko but not all its code is open source, i.e. free for you to examine. Its video-sharing equivalent of TikTok, CANCAN, was built with just 1,000 lines of program. The foundation has even demonstrated a prototype at the World Economic Forum’s 2020 Annual Davos Meeting of the best, brightest and richest in the capitalist establishment. Dfinity showed a desktop social network for professional profiles, labelled LinkedUp, an open version of the popular LinkedIn web facility, running on the Internet Computer.
Now you’ve read the good stuff, it’s time to learn why others are less convinced of ICP’s potential.
Coin Bureau’s Crypto Guy, despite praising the ambitions of Dfinity, has also been one of its severest critics. Another sceptic is Eduardo Próspero on Bitcoinist (LINK). Reporting on Dfinity’s reply to Crypto Guy’s criticisms, he also points out that people running independent nodes (key connections) for the Internet Computer will need special machines, manufactured by Dfinity, to run the ICP program.
Crypto Guy tried to explain how the Internet Computer would work but also said it “might just be the most complex cryptocurrency project in existence” (LINK), so I won’t even try. Suffice it to note that its speeds are close to those of the regular Internet and use requires zero fees unless transactions are involved, “in stark contrast to just about every other smart contract in existence, which requires you to pay a network fee for every single interaction” (Crypto Guy).
What bothered Crypto Guy was that to use the IC you need an “Internet Identity”. This, he feared, “means you’ll have a single identity that’s tied to everything you do” (LINK). Crypto Guy said: “If you’re booted out by the foundation, then it’s game over.”
Dfinity replied that Internet Identity is not as final a system as he thought. Dominic Williams wrote on Medium last 22 May: “You can have any number of Internet Identities, or IIs (now pronounced ‘eye eyes’)” (LINK). A Dfinity article on medium posted on 22 May asserted: “The Internet Identity service generates a different identity for every front end that the user logs into.” But it is not crystal clear how much privacy it gives users (LINK).
Próspero was not convinced. “It sounds like a dystopian nightmare,” he concluded.
ICP’s Network Nervous System (NNS) manages its functions, and can even “make changes to the economics of the ICP token,” Dfinity explains. For voting power, you must lock your coins: the more you lock, the more power you get. In his first article on ICP, Próspero noted: “Since the longer you stake, the more voting power you get, The Dfinity foundation will have ‘total control’ over the network forever.”
Internet Computer: Designed to the regulations of host countries?
Echoing Crypto Guy he added: “The NNS seems to be a single point of failure.” And ICP’s ambitions seem to be for “a total consolidation of control”, he said. Another critic warned on Reddit: “NNS […] can vote 51 per cent to take down any app on the Internet Computer. This means sites that some deem unsavory [..] as well as anything that a govt or Twittermob will deem to be dangerous to advancing their self-interests, would most likely end up being banned” (LINK). “Will the Internet Computer lead to mass censorship?” the poster asked.
Crypto Guy is worried by Williams’ declaration in 2018 that the Internet Computer will be designed to conform to the regulations of the countries where it operates. “That doesn’t sound at all like a crypto currency to me,” he declared. Yet Williams also proclaims ICP has “open governance” and decentralization, Crypto Guy points out with a frown. He calls for Dfinity to make its project fully open source as a solution. But he also notes opening up the code to public scrutiny does seem to be on Dfinity’s road map.
If all works out, ICP could replace the current Internet with something that is “efficient, convenient and safe”. But its network is not as decentralized as it appears, and “it is clear that its end goal is to replace the entire planet’s infrastructure,” Crypto Guy concludes. Today your information and activity is siloed by individual services, governments included. Hence his worries about a single identity for services promised to conform to government regulations. Within a week, his sceptical videocast had garnered nearly half a million views.
But the prospects remain tempting: “a seamless environment in which an advanced new form of smart contracts can be run. Smart contracts are tamperproof, unstoppable, and can plug into any other contracts. These smart contracts can run autonomously and process values, like data using tokens, among many powerful differences from traditional software. On the Internet Computer, they now run at web speed, serve web, and can scale without bounds” (Dfinity). The foundation comments: “This represents the biggest jump in innovation in the blockchain ecosystem since the launch of Ethereum” [in 2015].
It’s a project where the motto must be: watch this space.
Why The WEF Wants You To Learn About Bitcoin And Ethereum (13 June 2021) (LINK)
Dominic Williams answered questions on YouTube, July 2020 1000 views: https://www.youtube.com/watch?v=7W5M2Ubm_wQ
Internet Computer Genesis Launch Event, 7 May 2021 (100,000 views): https://www.youtube.com/watch?v=xiupEw4MfxY