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Video lesson

ICP: Internet Computer

Internet Computer Network

In our ever-evolving world, the Internet serves as the backbone of our daily lives, hosting everything from social networks to banking services. However, vast amounts of our data reside in centralized data centers owned by technology giants like Amazon, Microsoft, and Google, raising concerns about security, transparency, and control. Enter the Internet Computer Network, an innovative solution designed to decentralize and secure the internet using advanced cryptography and novel consensus protocols. This lesson aims to shed light on the key components of the Internet Computer Network, its advantages over traditional systems, and its intriguing tools that make it a game-changer, especially for those venturing into the cryptocurrency realm.

Core Concepts

1. Centralized Data Centers

Definition in Traditional Finance: Centralized data centers are specialized facilities that store and manage data and applications on behalf of enterprises and consumers. Decisions about data management and security fall into the hands of a few large corporations.

Crypto Parallel: The Internet Computer Network aims to decentralize data storage by using independent data centers connected in a secure network. This shift mitigates the risks associated with centralization, including potential monopolistic practices and service outages.

2. Nodes and Replicas

Definition in Traditional Finance: In traditional data architecture, a node usually refers to a point of connection where data can be created, received, or stored within a network.

Crypto Parallel: Here, nodes (or replicas) in the Internet Computer Network play a critical role in processing transactions and maintaining the blockchain. They are distributed globally to provide resilience and scalability unlike traditional nodes limited by centralized infrastructures.

3. Smart Contracts vs. Canisters

Definition in Traditional Finance: Smart contracts are self-executing contracts with the terms of the agreement directly written into code, typically executed on blockchain platforms.

Crypto Parallel: In the Internet Computer Network, smart contracts are referred to as canisters. Unlike traditional smart contracts, canisters not only execute transactions but can also perform computations independently, making them more versatile and powerful.

4. Internet Computer Protocol (ICP)

Definition in Traditional Finance: Protocols in finance establish the rules and conventions for processing transactions and communicating between nodes or systems.

Crypto Parallel: ICP is the means by which replicas communicate, sharing messages and coordinating block creation and validation across the Internet Computer Network, facilitating scalable and efficient operations.

5. Subnets

Definition in Traditional Finance: A subnet can be likened to a smaller, contained network operating under the larger umbrella of a parent network, often with its own polices and management.

Crypto Parallel: Each subnet in the Internet Computer Network operates like an independent blockchain, fostering scalability and enabling the addition of new subnets as demand grows. This architecture allows the network to adapt to usage levels dynamically.

Key Steps

1. Understanding Data Centers

Centralized control by few corporations
Security vulnerabilities can lead to major service disruptions

Explanation: Centralized data centers create a point of failure that jeopardizes data security and service continuity. The Internet Computer Network, by contrast, leverages multiple independent data centers to enhance reliability and user control over data.

2. The Role of Replicas

Distributed globally for resilience
Engage in consensus for transaction validation

Explanation: Replicas (nodes) work together to form a decentralized, robust network capable of handling heavy workloads while providing real-time access and validation. This collaborative approach differs from centralized operations, increasing responsiveness and security.

3. Canisters: The Advanced Smart Contracts

Canisters perform computations independently
Can be programmed using multiple languages including MotoCo, Rust, C, and C++

Explanation: The use of canisters represents a significant evolution in how contracts function within the crypto space, allowing for dynamic applications that can adapt to various operational needs beyond simple transaction execution.

4. The Consensus Algorithm

Block creation involves multiple steps
Notarization and finalization ensure single block consensus

Explanation: The novel consensus algorithm of the Internet Computer Network aids in accelerating the process of block validation, enabling the network to maintain integrity and stability. This mechanism prevents forks and ensures a singular path forward — an essential functionality for effective blockchain management.

A Blockchain Perspective

Crypto Connection

The novel concepts in Internet Computer Network not only redefine traditional norms but also offer improved efficiency and security compared to the older blockchain systems. For example, Chain Key Cryptography simplifies the verification process for entire subnets, unlike many traditional chains that require heavy data loads for validation. A project like Ethereum illustrates the complexity of validating transactions, further emphasizing the innovation and potential of the Internet Computer Model.

Examples

While the lesson does not reference direct visual aids, it conveys fundamental elements pivotal to understanding decentralized network functionalities.

Considering hypothetical examples:

Traditional Banking vs. Internet Computer Banking:
- Traditional: A bank’s central server system that could become compromised or go down, denoting risks of service unavailability.
- Internet Computer: A banking application hosted on canisters that operate independently across many nodes, ensuring that redundancy shields against outages.
Social Media Platforms:
- Traditional: Platforms controlled by a single corporation that can alter policies or access rules at will.
- Internet Computer: A decentralized social network where users retain control over their data, immune to unilateral corporate changes.

Real-World Applications

The Internet Computer Network aims to revolutionize how we think about and utilize the internet; it provides a secure alternative to conventional systems that often hinder innovation. For example, while traditional networks can experience significant downtimes or security breaches, decentralized systems built on the Internet Computer model maintain continuous operation, further inviting advancements in sectors like finance and social interaction.

Cause and Effect Relationships

When a centralized data center goes offline, it interferes with all applications relying on it, creating a ripple effect of service interruption. This highlights the interconnected nature of traditional networks. In contrast, with multiple replicas and subnets in the Internet Computer Network, the impact from any single node’s failure is negligible, increasing overall reliability.

Challenges and Solutions

Challenges:

Centralized ownership restricts data control.
Security vulnerabilities lead to potential outages.
Complexity in transaction verification across traditional architectures.

Solutions:

Embracing decentralization mitigates monopolistic control over data.
Advanced cryptography provides security assurances.
Simplified verification criteria using Chain Key Cryptography streamlines transaction approval compared to traditional methods.

In the face of skepticism about crypto’s safety, it’s crucial to highlight that the technology behind decentralized systems offers unique benefits for mitigating risks.

Key Takeaways

Decentralization is Critical: Reduces vulnerability by dispersing data control.
Enhanced Security: The use of cryptography protects data integrity and access.
Versatile Smart Contracts: Canisters outperform traditional smart contracts with independent computations.
Scalable Architecture: Subnets adapt to usage levels, enhancing performance.
Speed of Consensus: Rapid block approval ensures responsiveness in transactions.

These insights serve as a foundation for your journey into cryptocurrency and blockchain, illustrating that understanding traditional finance’s principles can significantly enrich your perspective on innovative technologies like these.

Discussion Questions and Scenarios

How does decentralization in the Internet Computer Network challenge traditional data center models?
In what ways do canisters enhance the capabilities of smart contracts?
Consider a financial service. What potential advantages would it gain by using the Internet Computer Network compared to a centralized system?
Compare the process of validating transactions in traditional banking versus the Internet Computer Network.
What challenges might arise if the adoption of decentralized networks expands dramatically?

Glossary

Centralized Data Centers: Facilities owned by corporations that manage data and applications.
Replicas: Nodes distributed globally that maintain the Internet Computer Network.
Canisters: Advanced smart contracts capable of independent computations.
Internet Computer Protocol (ICP): The communication framework for replicas in the Internet Computer Network.
Subnets: Independent chains within the Internet Computer Network, enhancing scalability and isolation.

As you progress through this lesson, I urge you to consider how these insights apply to your journey in the Crypto Is FIRE (CFIRE) training program, opening endless possibilities for exploration and innovation.

Continue to Next Lesson

Stay tuned for more enlightening lessons where we’ll delve deeper into the cutting-edge world of cryptocurrencies and blockchain technologies that are shaping our future!

Read Video Transcript

What is Internet Computer Network? Complete Beginner-Friendly Overview

https://www.youtube.com/watch?v=qdRVVFGt7Sc

Transcript:

The Internet as we know it works based on data centers, special facilities that host IT equipment and operation. Many of these data centers are centralized and owned by giants such as Amazon, Microsoft, and Google. That means we entrust our data to a handful of people who make decisions about the use of that data behind closed doors.

Centralized data centers are also an easy target for attacks. And if they fail, users will be denied access to a number of everyday services. Internet Computer suggests an alternative to the current centralized internet cloud providers with their independent data centers banded together. Internet Computer creates a secure network by implementing advanced cryptography and a novel consensus protocol.

The goal of the Internet Computer is to build a reliable, scalable, and high-speed network to host not only financial applications and games, but everything we can find on the internet today, from banking services to social networks. Let’s go through the components of the network and see how Internet Computer brings its ideas to life.

Internet Computer consists of data centers, which are scattered around the world, nodes, called replica nodes or just replicas, and smart contract counterparts that are hosted on these nodes. These smart contracts are called canisters. However, don’t be too quick to put an equal sign between smart contracts and canisters. Because unlike ordinary smart contracts, canisters can perform their own computation of transactions.

Canisters run applications written in a programming language specially developed by Internet Computer called MotoCo. Yet Internet Computer also has support for other common programming languages such as Rust or C and C++. Replicas receive transactions, called messages, in the Internet Computer Network, and compile them into blocks, validate those blocks, and thus form a blockchain.

Replicas communicate with each other using Internet Computer Protocol, or ICP. To make the network scalable, Internet Computer divides all nodes into groups, which are called subnets. One subnet equals one blockchain, and each subnet produces and validates its own blockchain. New subnets are constantly being added to the Internet Computer network when the system sees that the existing subnet’s workload is too heavy.

To order the process of creating new blocks and to ensure high validation speed, Internet Computer introduced a novel consensus algorithm that consists of four main steps. First, there is block making. Different subnet replicas can play the role of a block maker, suggesting a new block to be included in the network.

To prevent multiple replicas from simultaneously forming different blocks and thus splitting the network. To prevent multiple replicas from simultaneously forming different blocks and thus splitting the network, Internet Computer uses a special mechanism for prioritizing replicas called Random Beacon.

A replica creates a block from messages that are to be processed by a subnet’s canisters, then sends this new block to the network of other replicas to determine its validity and so the notarization process can begin. Let’s say a replica has seen a new block. It acts as a notary in this case.

The replica considers this block valid and puts its notarization share, a kind of signature equivalent on it, which will be sent to other replicas. The others also consider this block valid and put their shares on it. If two-thirds of the subnet replicas think the block is valid, that is enough for the network.

The network algorithm collects all the notarization shares and combines them into a single artifact called the notarization. It shows us that this block is valid and that the majority of the replicas have signed the message. This technology allows the network to compress multiple signatures on the same block into a single small signature, which means that even if a subnet has a lot of replicas, the notarization will still be small.

Then the final round of consensus called final, begins, where the replicas agree to include the block in the network. Finalization helps to make sure that the notaries behaved honestly and only one block is agreed upon in one round. This process aims to protect the network from creating more than one branch of the blockchain.

Now, the consensus algorithm asks the notaries to share how many blocks they have notarized in that round. If a notary has not signed any other blocks in that round, it will create another type of signature, called finalization share. If enough replicas create finalization shares for the same block, they can be combined into one finalization, just like it was with notarization shares.

Notarization and finalization shares are created in fractions of a second and help arrive at an agreement on the validity of a block in less than two seconds after it is proposed. But where do all these shares come from? On Internet Computer, shares are somewhat similar to signatures used in other blockchains.

A validator signs a block using the validator’s private key. The private key has an astronomical length and must remain secret. That is why a public key is used for verifying block signatures and transactions. It is generated based on a private key but does not give out the private key itself. Internet Computer has its own set of keys, public and private, not only for each validator, but also for each subnet as a whole.

Thanks to an innovation called Chain Key Cryptography, the project allows an entire subnet to have one public key and its corresponding private key to be split into shares. This technique makes Internet Computer secure. Shares of a subnet’s private key are distributed across all replicas of that subnet so that the parts of the private key do not allow the entire key to be forged, and two-thirds of the replicas need to participate in order to jointly sign a block and generate a threshold signature. As a result, no single replica has the knowledge of

the subnet private key, and yet collectively all replicas can work together to sign blocks that are verifiable by the subnet public key. Each block’s signature can be checked for validity with regard to the public key of the whole subnet.

And all public keys of all subnets can be checked for validity with regard to a single public key of the whole system, the public key of the internet computer. As a result, the validity of each transaction on the internet computer network can be verified just by having a single 48-bit public key of the Internet Computer, whereas in other chains, to verify the validity, one needs an abundance of data.

Thus, Chain Key allows any device, including smartwatches and mobile phones, to verify the authenticity of artifacts from the Internet Computer. The keys are generated by the very first subnet of internet computer, which is responsible for the network at various levels, and it is called the Network Nervous System, or NNS.

NNS can help create new subnets by generating public keys for them. Replicas in the new subnet will receive secret shares encrypted for each of them, with proofs showing the encryption process was correct. These proofs are called non-interactive zero-knowledge proofs. Key generation is not all that NNS is responsible for.

The NNS subnet is also in charge of maintaining the governance process of the entire network, identifying governance participants, and enabling the creation of proposals, as well as the distribution of the entire network, identifying governance participants, and enabling the creation of proposals, as well as the distribution of the network’s native token, ICP… the tech behind Internet Computer, how canisters are considered superior to regular smart contracts, what cycles are.