The blockchain industry has grown tremendously over the past decade, with new projects launching regularly, each with unique selling points and eye-popping roadmaps. From the early days of the ICO boom to DeFi summer, we’re witnessing a rapid evolution of this utopian technology into a force for good.
It’s now safe to say that the industry has lost its nascency and, for good measure, is shifting towards a better-connected world. You don’t have to search far and wide for evidence of blockchain’s maturation: an increasing number of #BUIDLers, and not merely core protocol developers anymore.
Even more, end users are looking to smart contract developers for a stab at one of society’s conceptual challenges like elitist gatekeeping, centralization, trust, and transparency — or rather, the lack thereof — through decentralized applications (dapps).
In the early Bitcoin days, all you wanted to do on the blockchain was send simple transactions back and forth. Or buy some Papa John’s with bitcoin (or buy a beer, idk😏). Those days are long gone now.
(Now, we’ve literally become farmers on DeFi lending dapps with high yield. It's no secret that the premise of quadruple-digit returns has left us trapped in the overnight lambros — “Lambo bros” — pipe dream. But that's another story.)
The Web3 movement is growing at a remarkable speed… far from being branded an “irrational exuberance” (the nerve!) If I’m being “oh, so dramatic,” it’s because I’ve seen the limitless potential of blockchain among the current crop of emerging technologies.
To this end, many blockchain projects have risen recently, intending to challenge the status quo and offer numerous benefits, including enhanced security, greater transparency, instant traceability, and increased efficiency and speed.
Ethereum and the Internet Computer (ICP) are two of the biggest blockchains to gain significant attention in recent times. In effect, a direct consequence of their unique capabilities and potential to power next-gen dapps. The Internet Computer is a decentralized blockchain project developed by the DFINITY Foundation, a Swiss non-profit research organization.
DFINITY Founder Dominic Williams created the Internet Computer as the next major leap in the blockchain timeline. Bitcoin launched the first cryptocurrency, and Ethereum introduced smart contracts to blockchains. The Internet Computer represents the third step — a "limitless blockchain" running at internet scale.
Undoubtedly, Ethereum is the most popular blockchain project after Bitcoin. If you’re actually “in it for the tech,” you probably broke into crypto with the Ethereum project, not through its myriad dapps. Hats off to you, good ser.
(For context, most crypto folks jumped on the bandwag’n during the Great Crypto Gold Rush, aka the 2017 ICO boom.)
Like the Internet Computer, Ethereum is a decentralized blockchain platform for building smart contracts and dapps.
Although both blockchains differ in core architecture, they share a critical common goal (amongst several other similarities): to integrate the presently fragmented blockchain landscape and better harness the power of blockchain interoperability for the good of humanity.
In this article, we’ll examine the Internet Computer and Ethereum, along with a comprehensive guide to their features, key merits, and use cases. This will provide you with a detailed analysis of the capabilities and limitations of these two blockchain giants.
By comparing both projects, we aim to show how these two blockchains can power the next generation of decentralized applications (dapps) and provide insight into the potential of blockchain technology to significantly transform virtually every industry known to man.
Ultimately, this comparison will help developers, investors, and crypto enthusiasts decide which blockchain platform to use for their projects and applications. But first, let’s look at each one in more detail.
Side note: This is the ultimate, comprehensive comparison between Ethereum and ICP, so it may be unusually long. Feel free to skip to specific sections using the table of contents.
Internet Computer (ICP)
Launched in May 2021, the Internet Computer is designed to provide faster, more secure, and more scalable decentralized web services than the current internet.
You’re probably expecting some background information, so here's an overview of the fast-growing blockchain.
Overview of The Internet Computer
The DFINITY Foundation — or, more correctly, “DFINITY Stiftung” — was initially founded in Zug in October 2016 with a stated goal: create a blockchain singularity, a World Computer branded DFINITY with a utility token named DFN. R&D began soon after, and four months later, the DFN ledger went live on the Ethereum network.
However, the project later rebranded to a more descriptive name: “Internet Computer”; the underlying protocol was named "Internet Computer Protocol," and the token was renamed to the ICP token. DFINITY’s five-year effort, the blockchain industry’s largest R&D operation, birthed the Internet Computer.
One unique aspect of the Internet Computer is that it replaces centralized servers or traditional cloud infrastructure with specialized node hardware to run smart contracts and dapps directly on the blockchain.
Here’s a rundown of the network’s key features and unique strengths.
ICP Key Features and Capabilities
The Internet Computer is a public blockchain. I’ve probably said that one too many times already. Anyone, and I mean anyone, can participate in the network’s day-to-day. The network enables complete decentralization by hosting dapps fully on chain without centralized cloud providers.
Canisters and Subnets
The project offers a unique way of deploying special smart contracts, called "canisters," on a vast network of nodes (over 1200 in total). This makes them faster and more scalable than traditional smart contracts deployed on individual nodes.
As for its architecture, the network is divided into multiple “subnets.” Each subnet (ICP lingo for shard) is a standalone blockchain that runs and processes transactions concurrently with others. All subnets run an instance of the core Internet Computer protocol stack, including consensus, to host smart contracts and dapps.
With its novel architecture, the Internet Computer aims to enable developers to build reliable dapps that can scale infinitely. Motoko is a developer-friendly programming language that makes it easy to build dapps on the network. The syntax is similar to popular languages like Python and JavaScript.
Chain Key Cryptography
Indeed, the IC’s consensus protocol is designed to achieve low latency, high performance, and robustness (i.e., optimum performance anytime). Through chain-key cryptography, the protocol provides cryptographically guaranteed finality to validate transactions and create new blocks.
Cross-chain Interoperability
Another salient feature of the Internet Computer is that it directly integrates with other blockchains without bridges using advanced cryptography. This is achieved using chain-key ECDSA signatures (an advanced form of threshold ECDSA), which allows the Internet Computer to natively create transactions on other blockchains like Bitcoin, and a native ETH integration is underway.
For instance, ICP integrates with the Bitcoin network at the protocol level. A canister smart contract can create Bitcoin addresses and send and receive Bitcoin directly on the Bitcoin ledger. Similarly, IC canisters will be able to use Ethereum-based tokens, and Ethereum smart contracts can leverage the capabilities of IC smart contracts.
DFINITY
Super-fast, Low-cost Transactions
Overall, the network can comfortably execute up to 11,500 transactions per second with a 1-second finality. Notably, you can perform transactions for a fractional cost. And thanks to the reverse gas model, you don’t have to pay gas fees when interacting with smart contracts (more on this later).
Advantages and Benefits of The Internet Computer
The Internet Computer didn’t rise to prominence out of a competitive ambition for blockchain supremacy — a crypto arms race, if you will. Instead, it was birthed from a shared vision of improving current blockchain systems to tackle some of the world’s biggest problems.
Even so, the Internet Computer protocol has several strong points that would make it a serious contender for a dominant position in the league of blockchains. If that were the goal, that is. We'll look at a few of them in this section, starting with these words: “web speed” and “internet scale.”
Superior Performance
To clarify, the Internet Computer’s superior performance remains perhaps the most prominent in its rather long list of merits. Historically, blockchains in general are known to suffer performance hiccups and transaction bottlenecks, particularly during high network activity.
In contrast, ICP is designed to offer a responsive experience comparable to traditional web applications (aka web speed). This is achieved through efficient data caching, low-latency messaging, and parallel processing. WebAssembly, a low-level virtual machine is used to enable efficient code execution in a secure environment.
On-demand Scalability
And thanks to the internet scale, the Internet Computer can support a large number of dapps and users without degrading performance or compromising security. Its sharding mechanism distributes the workload across nodes, enabling high scalability and efficient resource utilization.
Interestingly, the subnets are designed for high performance and can be adapted for various use cases and applications, leaving ample room for flexibility and innovation. For example, you can create a subnet for a DeFi lending solution collectively managed by participants — namely, liquidity providers, borrowers, etc.
Zero Gas Fees
In addition, ICP has a reverse gas model (aka “canister pays”) that allows users to interact with smart contracts without paying gas fees. Traditionally, blockchain systems require users to pay for the computational cost (“gas”) to execute transactions or interact with dapps.
Cycles are the computational resources for executing actions on the Internet Computer; they’re what “gas” is to Ethereum. In simple terms, one cycle unit is the cost of executing a single WebAssembly instruction. Under the “Reverse Gas Model,” developers — not users — pre-pay gas costs by loading canister smart contracts with Cycles.
On-chain Decentralized Governance
And speaking of accessibility, the network employs an on-chain decentralized governance framework backed by the Network Nervous System (NNS). The NNS is usually dubbed the Internet Computer’s “brain” since it manages various processes from protocol upgrades and economics to node machines and canisters.
Thanks to the NNS, anyone can contribute to the stewardship of the Internet Computer. The ICP utility token is used in protocol governance. ICP holders can stake their tokens in neurons and vote on pending proposals with the locked neurons.
Decentralized Identity
Finally, the Internet Computer safeguards your online identity and activity against bad actors using Internet Identity (II). II introduces passwordless login by leveraging Web3 authentication using physical devices and hardware security keys.
Internet Identity’s anonymous blockchain authentication framework ensures you control your data and backs it up for secure access on the blockchain. You can create an Identity Anchor and manage your digital identities without relying on centralized services like Google and Facebook.
Okay! Enough deets on the Internet Computer for now. Let’s look at the mother of smart contract blockchains: Ethereum.
Ethereum
Truth be told, the grand jury’s still out on whether the upsides of blockchain technology far outweigh its few drawbacks.
Either way, I’d probably go out on a limb and say the entire blockchain community is eternally grateful for Satoshi Nakamoto’s work in birthing the disruptive technology that we’ve come to know and enjoy today.
And again, I think it’s safe to say that Vitalik Buterin’s trophy cabinet is almost as brimming as his enigmatic muse. The Ethereum project continues to raise the bar for blockchains, not to mention his eye-opening quips that have inspired countless other builders to tackle key technological challenges.
No doubt, Ethereum’s had a hot streak since it went live almost a decade ago. Ah! The 2017 ICO bubble, DeFi summer, and the NFT craze… Ethereum has played a key role in the blockchain timeline.
We’ll briefly look over Ethereum’s key features, strong points, and perks in the next sections.
Overview of Ethereum
Ethereum is a decentralized blockchain platform that enables developers to build dapps and execute smart contracts. The project was conceptualized in late 2013 in a white paper, and development began in 2014 by a team of core developers headed by co-founder Vitalik Buterin.
Ethereum is powered by ether, a utility token that facilitates network transactions. The network went live in July 2015 and has since become one of the most popular blockchains, boasting the second-largest market capitalization after Bitcoin.
However, Ethereum is designed to be more flexible and adaptable than Bitcoin, which is primarily used as a digital currency. It’s noteworthy that Bitcoin’s creation set in motion a series of events that led to Ethereum.
More specifically, Buterin argued that Bitcoin (and blockchain in general) should have more use cases besides financial transactions and that it needed a robust language for building apps that could help tokenize real-world assets (e.g., stocks) on the blockchain.
Ethereum Key Features and Capabilities
A standout feature of the Ethereum blockchain is smart contracts. Smart contracts are digital contracts that automatically enforce the terms of an agreement. They’re programming logic (code) deployed to the blockchain and triggered to self-execute when certain conditions are met.
Ethereum ushered in a tsunami of projects and onboarded millions of users within half a decade of its launch. These projects can run on the blockchain without needing an intermediary or sole controlling authority, not to mention there is no single point of failure. This makes dapps more secure, transparent, and resistant to censorship.
Thanks to smart contracts, developers can create complex and immutable decentralized applications with automated transactions, such as token issuance, voting systems, and prediction markets.
Have you ever used virtual machine software? Personally, I use them to run different operating systems on my Windows PC (Kali and Tails sit atop this list, no thanks to my *wink wink* activities, but I digress).
Now, Ethereum has its own virtual machine (EVM), which sits at the heart of code execution on the blockchain. The EVM compiles smart contract logic to bytecode, allowing dapps to run on any computer connected to the Ethereum network.
This makes sense since the deployed contract is no longer a high-level programming language but now machine code, at least in a way.
On 15 September 2022, Ethereum 2.0 went live, effectively transitioning its consensus mechanism from proof-of-work (PoW) to proof-of-stake (PoS). This upgrade, known as "the Merge," was the final in a series of upgrades (“phases”). This switch has cut Ethereum's energy usage by 99%.
Finally, Ethereum has several token standards, including ERC-20, ERC-721, and ERC-1155, which enable the creation of custom tokens on the Ethereum network. This has led to the creation of thousands of new tokens, including stablecoins, utility tokens, NFTs, and governance tokens.
Advantages and Benefits of Ethereum
The Internet Computer and Ethereum are two blockchain projects that have gained significant attention in recent years due to their unique potential to power the next generation of decentralized applications (dapps).
It’s common for crypto enthusiasts and publications to tag every smart contract blockchain launched post-Ethereum as the latter’s “killer.”
Quite on the contrary, the DFINITY Foundation and the ICP community have always maintained an aversion to this moniker. Instead, the taxonomic preference for the Internet Computer is as an “enhancer” to the Ethereum blockchain.
In the same vein, Ethereum has numerous advantages that make it a safe haven for blockchain enthusiasts and developers. Here are a few of them.
For one, Ethereum is highly flexible as it enables developers to create a wide range of dapps. These range from DeFi (lending, borrowing, and trading platforms) to play-to-earn gaming platforms. The blockchain also allows anyone to create and exchange cryptocurrency tokens and NFTs.
Furthermore, Ethereum’s decentralized nature ensures that there’s no central controlling authority. This has the added benefit of censorship resistance, which is particularly essential for dapps that rely on trust and transparency.
Picture a decentralized network housing thousands of nodes and bad actors gaining control over the network. Hard to picture, yes? Ethereum has far better security and network integrity than centralized systems, with no single point of failure.
Finally, Ethereum’s token standards promote interoperability by enabling developers to build new dapps that can interact with existing dapps. This feature has proven particularly useful in the DeFi sector, where new financial instruments leverage several dapps and tokens.
Internet Computer vs Ethereum
Ethereum has enabled the creation of countless decentralized applications and tokens. As the blockchain industry continues to grow and evolve, Ethereum is likely to remain a key player in the space.
Internet Computer is a powerful blockchain platform. Its flexibility, security, and decentralization make it an attractive option for developers looking to build large-scale decentralized applications.
Comparison of Technical Specifications
The Internet Computer and Ethereum are both decentralized blockchains; however, they don’t share a similar approach to achieving decentralization. Not to mention that the concept of decentralization has several dimensions and cannot be understood as a whole.
Ethereum deploys smart contracts on single nodes, while a canister uploaded into the Internet Computer is assigned a subnet containing multiple nodes on which it’s installed. The subnet only runs on the nodes that participate in that subnet. This ensures that the results are correct, that the network is robust, and that canisters run forever.
Moreover, Ethereum had previously used proof-of-work (PoW) for consensus, causing high energy consumption and high transaction fees during network congestion. Now with proof-of-stake consensus, the network has tackled the energy problem.
On the other hand, the Internet Computer employs a novel consensus mechanism powered by Chain Key cryptography, a set of cryptographic protocols that orchestrate nodes on the Internet Computer.
Through Chain Key cryptography, the Internet Computer has a single public key. Even more, all nodes hosting a canister receive secret key shares that enable them to jointly sign messages (transactions). The network validates messages with the public key, drastically reducing transaction time.
Ethereum and Internet Computer have an average block time (the amount of time between blocks) of 12.08 seconds and 0.936 seconds respectively. The average transaction cost for ICP is $0.0000022, while Ethereum’s is $2.39.
Also, the on-chain storage cost (for storing 1 GB of data per year on chain) for Internet Computer and Ethereum is $5 (3.95T cycles x 1XDR) and $15,494,409 (12,643.75 ETH).
In terms of programming languages, Ethereum supports Solidity (native), Vyper, Yul, and FE. Solidity is a specialized language for smart contracts, while Internet Computer supports multiple programming languages, including Motoko (native), Rust, TypeScript, and Python.
Comparison of Use Cases
Both Ethereum and Internet Computer have a wide range of use cases, including decentralized finance (DeFi), gaming, social networks, and supply chain management.
However, Ethereum has been around for much longer and has a more established dapp ecosystem. Many of the most popular DeFi protocols and dapps, such as Uniswap, Aave, and OpenSea, are mainly built on Ethereum.
On the other hand, Internet Computer's unique features, such as its ability to run traditional web services and integrate with other blockchains, make it a promising platform for enterprise IT applications and large-scale decentralized projects.
Other use cases of the Internet Computer include decentralized web hosting, digital identity management, and messaging.
Comparison of Performance and Scalability
Ethereum had faced scalability issues due to its PoW consensus mechanism, resulting in high gas fees and slow processing times during periods of network congestion. The recent Ethereum 2.0 upgrade switched the network to proof-of-stake (PoS) consensus.
Internet Computer’s Chain Key cryptography allows for faster and more energy-efficient processing of transactions. Additionally, Internet Computer's architecture enables it to scale horizontally, meaning it can add more nodes to the network on demand.
In terms of performance, the Internet Computer has an average MIEPs (millions of executed transactions per second) of 20,000, while Ethereum’s maximum MIEPs is 1.25. Ethereum’s average TPS is 11.1 transactions per second in contrast to ICP’s 5382 tx/s.
Internet Computer's ability to scale dynamically, combined with its high-speed processing capabilities, could make it a more scalable platform than Ethereum in the long run.
Which One is a Better Investment?
As with any investment, there is no one-size-fits-all answer. Ethereum is more established with a larger ecosystem of decentralized applications. Even more, it has a large community of developers and supporters, which has helped it maintain its position behind Bitcoin.
Notably, this community has contributed to the development of numerous dapps and protocols. In fact, a lot of experts predict Ethereum will continue playing a key role in the space.
However, the Internet Computer could potentially disrupt traditional industries and create new use cases for blockchain technology. It can integrate with traditional web services and communicate with other blockchains, helping position it as a key player in the emerging decentralized internet.
The blockchain’s unique features, such as its scalability and interoperability, could make it a promising investment for those looking to capitalize on the potential of blockchain technology.
Moreover, the DFINITY Foundation, the non-profit backing the Internet Computer project, has received funding from prominent investors and venture capital firms. This backing provides a level of stability and credibility to the project, making it a potentially attractive investment for those looking to “play it safe.”
In contrast, the Internet Computer is a newer platform that is still in its early stages of development. While this comes with more uncertainty and risk, it also presents an opportunity for investors to get in on the ground floor of potentially revolutionary technology and garner massive gains.
Finally, it's worth considering the current market conditions and future potential of each platform. Ethereum has been around for several years and has, in a manner of speaking, bloomed. While there is still room for growth, some investors may view Ethereum as a more mature investment with less potential for explosive growth.
Conclusion
The Ethereum network and the Internet Computer are two blockchains that have risen in popularity over the past couple of years. Although they’re much different in core architecture, they share striking similarities in their end goals.
DFINITY Founder Dominic Williams has repeatedly stressed how the Internet Computer’s history is “inextricably linked” with the Ethereum project. The Ethereum community provided initial funding, and its core devs contributed in the early days of the former.
The key distinction is that Ethereum stores smart contract logic, while Internet Computer dapps run entirely on the blockchain. Additionally, the Internet Computer provides a seamless user experience since most dapps can be accessed from the browser without installing extensions.
On the performance front, Ethereum’s occasional congestion and stifling gas fees have made it somewhat hostile to the development of new dapps. However, the network has migrated to a proof-of-stake (PoS) consensus mechanism, which will probably reduce energy consumption.
A key selling point of the Internet Computer lies in its ability to support massive amounts of user data and transactions. As I mentioned earlier, the network could scale horizontally to handle up to millions of transactions per second.
Although dapps can be built on both Ethereum and the Internet Computer, they vary slightly in their use cases and end users. Ethereum powers thousands of dapps, with use cases ranging from DeFi and gaming to healthcare and supply chain management.
The Internet Computer can conveniently support a vast array of use cases, thanks to its superior performance. For instance, the low cost of on-chain storage makes it a great option for building decentralized storage platforms and web hosting services.
Even more, the network could be used to power digital payments and identity management solutions due to its high security. Decentralized messaging is also a strong possibility since the network can scale to support a large number of users.
Overall, it’s imperative for developers and users to carefully examine the technical specifications, use cases, and performance measures for each platform before choosing one for their project.
In all, it's important to keep an open mind (DYOR) and consider factors beyond technical specs and use cases when making investment decisions.
Berto Parga Pena
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