Internet Computer: A Decentralized Internet
By Selene Wang | Crescent City Capital Market Analyst Intern
1. Introduction to ICP
Like a lot of projects in the cryptocurrency space, the Internet Computer Protocol (or ICP) is much more than a form of digital money. In fact, the ICP token that can be purchased and traded via exchanges like Coinbase is just one part of a much bigger idea.
ICP’s basic idea is to create a new kind of decentralized internet and global computing system — where independent data centers all over the world could join together to create an alternative to the cloud services (from companies like Amazon Web Services and Google Cloud) that power most of the current internet. ICP’s plan is to have the protocol running on millions of computers around the world.
2. How does it work
The Internet Computer attempts to offer a fundamental alternative so that developers can build, host, and serve applications in a more decentralized way — allowing websites to be deployed directly onto the public internet. Further, the Internet Computer would incentivize open source and transparent software development.
As explained in the MIT Technology Review’s profile of the Internet Computer: “Instead of running on a dedicated server in Google Cloud, for example, the software would have no fixed physical address, moving between servers owned by independent data centers around the world.”
One way to think of ICP is as a way of converting crypto into processing power — the network will establish a fee based on the amount of computing power required by a developer’s project. As long as the fee is paid, the website will run on the public internet.
In theory, any kind of application can be created and run on the Internet Computer — from social networks similar to LinkedIn and TikTok to software similar to all the familiar applications you know today to new kinds of applications not yet conceived. As a demonstration, ICP developers have published open-source code for CanCan, which they describe as a “decentralized TikTok.”
3. Tokenomics: The ICP Token
The Internet Computer makes use of a utility token called ICP. The ICP token is used for a variety of functions on the platform. Users can stake ICP giving them the right to vote and earn voting rewards. Investors can use ICP to participate in SNS swaps launched on the Internet Computer, i.e., the initial offerings of the native DAOs. Developers use ICP token to purchase cycles to power their dapps on the Internet Computer. And node providers are remunerated in ICP for the compute power they provide to the Internet Computer platform.
4. Market Analysis
(1) Price & Market Cap Performance
- Live price: $8.02
- All-Time High: $700.65 (May 10, 2021)
- All-Time Low: $2.87 (Sep 22, 2023)
- Live market cap: $3,787,226,770
- Circulating supply: 472,140,180 ICP coins
(2) Past performance
The project was founded by Dominic Williams in 2016, and several funding rounds were conducted throughout 2018 — raising a total of $195 million from various VC’s and seed investors including Andreessen Horowitz, Polychain Capital, Electric Capital, Multicoin Capital, and several other early Ethereum supporters. One of the major contributors to the growth and development of the Internet Computer is the DFINITY Foundation, a not-for-profit headquartered in Zurichwith offices in San Francisco, and remote teams globally. DFINITY has the largest R&D team in the blockchain space with over 200 world-renowned scientists and engineers specializing in cryptography, distributed systems, execution environments, language programing and more.
In May 2021, the Internet Computer governance coin entered the charts like an out-of-control train. The ICP debuted around the $500 mark and reached a $700 all-time high. It instantly became a Top 10 coin. Throughout that first month, it typically traded around the $300 mark. And then, within the span of a few weeks, it fell off the top 10 charts as drastically as it had entered.
Arkham Intelligence’s report summarizes the situation as follows. “The Treasury and suspected insiders have continually sent millions of ICP worth billions of dollars to exchanges, totaling 75% of the total deposited, possibly driving ICP’s price collapse. We do not have clear and direct evidence that these deposited tokens were sold. But deposits to exchanges and trading platforms are generally for the purpose of selling.”
Dominic Williams, the Dfinity Foundation’s and Internet Computer’s Founder and President, responded that “Founders and executives were locked up entirely for the first week. For my part, I have sold substantially less than 5% of my holdings since Genesis – after working day and night on the project for years.”
After that, like much of the crypto market, ICP suffered during the broader market downturn in 2022. In 2023, ICP attempted a comeback with various technical upgrades, e.g. the push for decentralized AI infrastructure. These developments spurred a brief recovery, with prices rising to around $18. Despite the rebound, volatility remained, as ICP was highly sensitive to market trends and the success of its ecosystem projects.
(3) Technical Analysis
- Relative Strength Index (RSI): The RSI is around 46, which is slightly below the midpoint (50), indicating neutral to slightly bearish momentum. The RSI is not in the oversold territory (below 30), suggesting that there may not be a significant buying opportunity yet unless the RSI trends lower. Given the RSI has been oscillating close to neutral without clear oversold or overbought signals, the market lacks a decisive momentum shift.
- Moving Averages: Currently, the SMA 20 and SMA 50 are close together, suggesting consolidation in the short-term price trend. This often indicates a period of indecision where neither buyers nor sellers are dominating. Both SMAs are below the SMA 200 (Yellow Line), which is positioned above the current price level, indicating a bearish longer-term trend. The sustained position of the price below the SMA 200 suggests that downward momentum has been persistent for ICP. The SMA 200 is relatively flat but still high above the recent price action, reflecting a strong prior downtrend. For a bullish reversal, the price would need to break above this moving average, which currently acts as significant resistance.
5. Summary
Internet Computer (ICP) is not just a cryptocurrency, but a decentralized internet infrastructure aimed at transforming cloud services. It aims to replace centralized cloud services with a network of independent data centers that together create a new kind of internet. If successful, ICP could lead to a fundamental transformation of the internet.
The overall technical picture suggests that ICP is in a bearish trend with a lack of immediate bullish momentum. While consolidation is ongoing, a bullish reversal would require the price to break above key moving averages, which currently act as resistance. Traders are advised to watch for broader market shifts and developments within the ICP ecosystem for future direction.
Reference
https://coinmarketcap.com/currencies/internet-computer
https://internetcomputer.org/how-it-works
https://www.coinbase.com/learn/crypto-basics/what-is-internet-computer