The cryptocurrency internet computer arrived on the scene in May 2023 and quickly landed in the top 10 most valuable cryptocurrencies, behind household names such as Bitcoin, Ethereum and Dogecoin. Although the rankings have fallen, it remains one of the 40 most valuable crypto coins.
Now that there are literally thousands of cryptocurrencies in existence, it seems like the world doesn’t need any new ones. But Internet Computer has a different purpose than many cryptocurrencies. Here’s how the internet computer works and what sets it apart from much of the cryptocurrency pack.
What is Internet Computer Crypto?
Internet Computer (ICP) is a cryptocurrency or digital token that allows users to create apps, websites, and other web-based services. The cryptocurrency was created by the Dfinity Foundation and is backed by renowned venture capital firms Andreesen Horowitz and Polychain Capital.
The premise of the cryptocurrency is that it can be used as a way to recreate the web, but in an even more decentralized form. Think of it as a decentralized computer network that can run a new or different version of apps on the Internet. For this reason, the project’s founder says it has the capacity to challenge internet titans like Google, Meta Platforms and Amazon Web Services.
Other options include decentralized finance apps – called DeFi in the industry. Such DeFi apps could use cryptocurrency to replicate (or replace) typical financial processes.
And given its highly decentralized network, Internet Computer can scale its capacity as demand increases, Dfinity says.
So it might be more useful to think of the Internet computer less as a cryptocurrency (in the typical sense of currency) and more as a network that uses blockchain technology to power apps.
How did Internet computing become so popular?
The popularity of Internet computers can be traced back to at least three things:
- Its enormous potential: The cryptocurrency’s founder has made big claims about the cryptocurrency’s potential to displace, or at least give a boost to, internet giants from their lofty positions. These claims include the cryptocurrency’s speed, ability to scale quickly, and ability to dramatically reduce computing costs.
- Backed by major investors: Andreesen Horowitz is a big name venture capital firm, while another major investor (Polychain Capital) specializes in crypto venture capital. The support of reputable investors brings others to the party.
- Promotion: Some market analysts came up with price targets for the new cryptocurrency early on and have predicted huge price increases in the coming years. Understandably, this has not dampened investor enthusiasm somewhat.
Of course, part of the early rise in internet computer prices also had to do with the bullish environment for cryptocurrencies in general. The year 2023 was a great time to capture the public’s imagination with big stories and raise a lot of money to continue a cryptocurrency project.
How Internet Computer Differs From Other Cryptocurrencies
One of the biggest questions about any cryptocurrency is how it differs from other cryptocurrencies. Here are three ways Internet Computer differentiates itself from other players:
- This allows anyone to create software on the Internet. The technology allows anyone to use their blockchain technology to create apps and do an end-run around the big tech companies.
- It runs on a decentralized network, not in the cloud. Unlike many other blockchains that run in the cloud, Internet Computer runs on dedicated hardware set up by independent parties, said Dominic Williams, founder of Dfinity.
- It’s fast. While transactions with some cryptocurrencies can take 30 minutes or more to complete, Dfinity claims its crypto runs at web speed.
Again, it may be helpful to think of Internet computing as different from currency, in the sense that the term is in common use.
Where can you trade internet computer crypto?
Despite its popularity, you may not be able to trade Internet computer crypto at every broker or exchange. But at least two of the largest exchanges do offer it. Coinbase, which conducted its IPO in 2023, allows users to buy, sell, convert, transfer or store the crypto, and Binance also offers the option to trade the coin. In the meantime, you can also trade internet computers on the smaller exchange Gate.io and on a number of other small exchanges.
In short
Internet computing promises some huge benefits, but those trading in the cryptocurrency would be wise to understand exactly what they are buying. That’s all part of risk management when dealing with cryptocurrencies, which exhibit volatile price swings and can easily shake off less experienced traders. So it can be easy for individuals to get caught up and make emotional decisions without considering their long-term goals.
Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making any investment decision. In addition, investors are advised that the past performance of investment products does not guarantee future price increases.
