What is ICP? An Introduction to the Internet Computer Token for Beginners

What Is ICP?

Internet Computer is the first blockchain project to achieve Internet-scale self-expansion, going far beyond traditional blockchains that operate only at the application or data storage layers. This allows both individuals and businesses to build and launch any kind of software, service, or content directly on the Internet—without relying on tech giants like Facebook, Google, Amazon, or Twitter.

ICP is a highly scalable open-source protocol that supports interoperability with other blockchains and makes it possible to migrate and operate any previously centralized application on the Internet Computer platform. Together with Filecoin, Internet Computer is instrumental in building Web 3.0—a new Internet era powered by decentralized blockchains and smart contracts, aiming to reshape the global Internet infrastructure.

To understand ICP's potential, consider how MetaMask currently aggregates DeFi protocols into one interface. Internet Computer goes further, enabling smart contracts to directly interact and deliver web content seamlessly to end users, creating a fully decentralized experience from start to finish.

The ICP Team

Internet Computer was initiated by the non-profit Dfinity Foundation, which brings together over 200 skilled developers across offices in San Francisco, Zurich, Palo Alto, and Tokyo. The team features leaders with impressive credentials—researchers with nearly 100,000 academic citations, a testament to their scientific authority and contributions.

Following successful funding rounds, Dfinity raised nearly $195 million for the project, with backing from leading venture capital firms such as Aspect Ventures, Amino Capital, Eterna Capital, Polychain Capital, and Andreessen Horowitz.

Internet Computer was developed by renowned cryptographer Dominic Williams. Williams describes ICP as a "new open Internet" and defines the Internet as "a global computer securely hosting software with superpowers." He is credited with inventing breakthrough technologies like Threshold Relay and Probabilistic Slot, which are core to Internet Computer's architecture.

Dfinity debuted its first dApp at the annual Davos conference, backed by the World Economic Forum. Named LinkedUp, the app is a decentralized version of LinkedIn, allowing users to manage their professional profiles without centralized intermediaries. They later released CanCan—an open-source TikTok alternative with just 1,000 lines of code but scalable storage, showcasing the efficiency of ICP's architecture.

Internet Computer has launched its mainnet, marking a major milestone. The project's vision is for ICP's open Internet to gradually replace today's closed Internet over the next decades.

How Does ICP Work?

While Internet Computer is primarily open source, its code is licensed under Apache 2.0, with some components under the Shared Computer Community License and Internet Computer Community License. This ensures transparency while safeguarding intellectual property.

The ICP network is built using a new programming language developed by the Dfinity Foundation called Motoko—designed specifically for decentralized apps. For flexibility, ICP also supports popular languages like RUST and C, enabling developers to migrate or build new applications with ease.

Like Cardano or Ethereum 2.0, Internet Computer uses a proof-of-stake consensus mechanism, but with a more complex architecture featuring four layers: Identity, Randomness, Blockchain, and Notarization. This multi-layered structure provides exceptional stability and security.

Unlike traditional smart contracts, ICP employs "canisters"—automated containers for application logic and obligations. The four-layer architecture gives these canisters near-infinite scalability, allowing them to handle massive transaction volumes without bottlenecks.

Critically, ICP's proprietary Chain Key Technology enables true web-level speed: actions and queries are completed in milliseconds. ICP can process thousands of blocks per second, vastly outperforming previous-generation blockchains. By comparison, traditional Ethereum handles just 13–15 transactions per second.

By harnessing the combined computing power of all nodes in the blockchain, ICP delivers a unified platform capable of running any application at any scale. End users interact with canisters seamlessly, with no perceptible difference from today's centralized web services.

What Makes Internet Computer Token Unique?

The Internet Computer token (formerly DFN) is directly linked to ICP's Network Nervous System (NNS) and serves as the core utility token for the ecosystem. NNS is a decentralized governance protocol for network management and coordination, introduced previously. It comprises four main components:

• Data Centers – 48 independent data centers worldwide ensure geographic decentralization
• Nodes – Around 1,300 independent computer nodes currently participate in the network
• Subnets – Similar to Polkadot’s parachains, enabling parallel processing and scalability
• Canisters – Next-generation smart contracts with extreme scalability and superior performance

Like other blockchains, users must stake ICP to participate in network governance. Once staked for a set period, ICP becomes a "neuron," allowing holders to vote on governance proposals. Voting power is proportional to both the staked amount and duration.

Each month, neurons earn voting rewards in the form of new ICP, incentivizing active governance participation. Beyond governance, ICP powers dApps hosted on the ICP blockchain. Developers must convert ICP into "cycles"—the computational energy units that fuel canisters—when deploying applications.

ICP’s value is influenced by both inflationary and deflationary factors. At launch, ICP had an initial supply of 469,213,710 tokens and an initial circulating supply of about 128,985,798 ICP. Shortly after mainnet launch, ICP reached a market cap of $71.8 billion, signaling strong community expectations. However, its price has since experienced volatility and corrections, reflecting broader crypto market cycles.

Should You Buy ICP?

Most major crypto exchanges have listed and support trading for Internet Computer, allowing investors to buy and sell ICP easily.

Although Dfinity's stated mission is to fight monopolies and centralized control by tech giants, there is a notable paradox: Dfinity unveiled its first dApp at the World Economic Forum, an organization often criticized for promoting centralization and oversight. This raises questions about the project’s true degree of decentralization.

Even so, ICP’s strong team of academic and professional experts is a key asset. Few projects rival Internet Computer’s ambition and technology—Filecoin being an exception, although it focuses solely on decentralized data storage. The name "Internet Computer" itself reveals the project's ambitious goal: to make the Internet more open, transparent, and engaging.

Investors should carefully consider factors such as breakthrough technology, a robust team, and the risks of price volatility and long-term feasibility before investing in ICP.

FAQ

What is the ICP (Internet Computer) token and what is its function?

ICP is the utility token of the Internet Computer network. It is used for transactions, service fees, and network governance. ICP also secures and powers the platform.

How can you safely buy and store ICP tokens?

Purchase ICP on trusted platforms and store it with the official NNS wallet at nns.ic0.app. Use a strong password, never share your private key, and verify sources before transacting.

How does Internet Computer differ from Bitcoin, Ethereum, and other blockchains?

Internet Computer offers faster transaction times (3–5 seconds), a dedicated platform for web applications, enables dApps to run directly on the blockchain without centralized servers, and delivers better scalability and performance than Bitcoin or Ethereum.

What risks should new users know about ICP tokens?

ICP tokens face risks such as domain blocking or server attacks. Decentralized apps may fail if attacked, leading to losses. Token prices can also be highly volatile due to shifting market demand.

What is the future outlook for Internet Computer?

Internet Computer (ICP) is expected to grow significantly with Bitcoin and Ethereum integration, aiming for a future of decentralized, high-performance computing and expanded global Web3 adoption.

How do you stake ICP tokens and earn returns?

Connect a wallet supporting ICRC1, enter the ICP amount you want to stake on platforms like Meta Pool to receive stICP with high APY, then use stICP in DeFi protocols to further increase your returns.