How did Internet Computer (ICP) become a top-10 cryptocurrency in just a short period of time?

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At one point, the gap in ICP values across various crypto exchanges reached $2,500.

In its Coinbase debut on Monday, traders priced Internet Computer (ICP) at $630. However, on Binance, dollar offers for the token reached as much as $3,093 on Tuesday. Meanwhile, HitBTC posted an ICP high of around $407.

The big price gaps across several cryptocurrency exchanges demonstrated a crazed trading sentiment in the Internet Computer industry, propelling ICP into the top ten cryptocurrencies by market capitalisation, surpassing even veterans like XRP, Dogecoin (DOGE), and Cardano (ADA) and reaching as high as fourth place.

ICP 1-hour candle close across multiple crypto exchanges. Source: Tradingview

Many crypto traders and commentators were taken aback by ICP’s abrupt appearance in the top-ranking cryptocurrencies. A brief search of the token’s issuing authority, Internet Computer, revealed that it is a “blockchain-based cloud computing project” that seeks to create a free, public network.

Why ICP price rallied?

Many crypto traders and commentators were taken aback by ICP’s abrupt appearance in the top-ranking cryptocurrencies. A brief search of the token’s issuing authority, Internet Computer, revealed that it is a “blockchain-based cloud computing project” that seeks to create a free, public network.

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The presence of high-profile financial players in the initiative, however, was the most important takeaway for traders. This included the US-based angel investor Andreessen Horowitz, known for its early support of Twitter, and Polychain Capital, a crypto-focused hedge fund in New York led by Olaf Carlson-Wee, who previously served as Coinbase’s Head of Risk.

Meanwhile, shortly after its launch last Friday, the ICP token was listed on major cryptocurrency exchanges. That represented a well-planned campaign by DFINITY, the Zurich-based charity that backs Internet Computer, which got ICP tokens into the minds of everyday traders.

 

What is Internet Protocol?

In hindsight, DFINITY intends to build a blockchain-based platform in which the internet itself serves web applications rather than cloud storage services. Its Internet Computer protocol recommends hosting online resources like social media, email, search, storage, and peer-to-peer digital communications on top of its public Web 3.0 cloud-like networking protocol.

The aim is to focus more on massive data centres and high-end node machines (aka validators) with far greater capability than the leading blockchain Ethereum.

In short, DFINITY plans to have the first genuinely global blockchain network that operates at peak web speeds and has limitless scaling capabilities to accommodate any scale smart contract computation.

“If the IC succeeds at replacing legacy IT, there would be no need for centralized DNS services, anti-virus, firewalls, database systems, cloud services, and VPNs either,” noted Mira Christanto, researcher at crypto analytics platform Messari.

DFINITY proposes decentralization by introducing a unique consensus model dubbed as Threshold Relay, coupled with its Blockchain Nervous System to ensure algorithmic governance.

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In the meantime, ICP functions as a native asset of the Internet Computer. Its function on the web includes staking, which enables users to engage in the Blockchain Nervous System, and protection deposits, which enable private institutions, such as client applications and cloud networks, to link to the public network of the Internet Computer.

Growth prospects for ICP

DFINITY has previously raised $163 million from private fundraising rounds. Meanwhile, in February 2017, the nonprofit company obtained $4.1 million in Bitcoin and Ethereum tokens. It distributed $35 million in ICP tokens (formerly known as DFN) to its early backers in May 2018. This accounted for 0.8 percent of the original ICP supply.

Participants in the airdrop obtained IOU copies of their ICP portfolios in September 2020. On May 10, a day before the token’s debut on Coinbase, they were able to move them back to ICP.

ICP crashes by 89% after its bid crossed $3,000 on Binance. Source: Tradingview

Dfinity intends to expand the data centre and developer network. Currently, the nonprofit operates seven subnets with 68 nodes spread across 12 separate data centres. By the end of 2021, the target is to have 123 data centres hosting 4,300 nodes.

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The prospects of infrastructure development in the Internet Computer environment, similar to Bitcoin and Ethereum, could cause speculators to lift their long-term bids on ICP-enabled pairs. It will gain much more traction as investors try to seek shelter from their worries of macroeconomic inflation.

 

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