The Web3 has been a major topic in the past few years. In this period, it has been viewed as a better alternative to Web2, which is now controlled by well-known companies like Microsoft, Alphabet, and Amazon. The promise of Web3 is that most products will be open source and mostly decentralized. For example, instead of using centralized servers in storage, companies can use products like Filecoin that rely on decentralized infrastructure.
Will Internet Computer conquer Web3?
There are many blockchain projects that seek to play an important role in the Web3. Internet Computer, a platform that was launched in 2021, hopes to provide developers with all tools that they need to build quality decentralized Web3 products and services. It has developed tools, including decentralized computing power that makes it possible for builders to create quality applications in all industries, including social media, gaming, non-fungible tokens (NFT), and finance.
Internet Computer has numerous features. At its core, it has canisters, which are its version of smart contracts, which can store data, perform computations, and provide technology computations to users. Further, it is made up of different protocols that are interconnected independently on each node to form an ever-expanding blockchain protocol.
Internet Computer is radically different from other popular blockchains like Ethereum, Polkadot, Solana, and Cardano. The main difference is that it offers the infrastructure that developers need to build their products. Smart contracts are part of this infrastructure. It also has about 41 data centers and 82 node providers Ethereum, on the other hand, provides just smart contracts that people use to build their applications.
Internet Computer’s protocol is made up of four key layers, including peer-to-peer, consensus, message routing, and execution. Conventional blockchains don’t have this technology.
Ecosystem challenges and ICP price
In the past few years, Internet Computer’s ICP token has not done well. The coin’s initially peaked at $3,163 when it went live in 2021. At the time, it hurried to become one of the biggest cryptocurrencies in the industry with a valuation of over $30 billion. Today, ICP price is trading at $5.5, giving it a market cap of about $1.5 billion. This makes it th 39th biggest coin in the world.
Internet Computer’s underperformance is mostly in line with that of other cryptocurrencies like Ethereum, Bitcoin, and Solana. However, a closer look shows that there is another reason in why its ecosystem has not gone mainstream yet.
In my view, I believe that the world is not yet ready for Web3 products simply because Web2 platforms work well. While social media platforms like Twitter and Facebook have their issues, the reality is that billions of people use them. It will be a hard sell to convince an ordinary person to use a decentralized social media platform. While Mastodon has been heavily promoted, it only has less than 5 million users.
We also have another good example in Web3 storage dApps like Filecoin, SiaCoin, and Storj. On-chain data shows that the number of users in these platforms is not as high as was expected. The same is true with other Web3 dApps like Audius and Theta.
Internet Computer ecosystem challenges
As mentioned, I believe that Internet Computer has an ecosystem problem even though the number of developers in the ecosystem is rising. As shown below, data by TokenTerminal shows that the number of daily developers in the ecosystem has risen to 130, the highest level since November last year. It had the 6th biggest developer community in 2022. Similarly, the amount of fees in the network has been growing.
Internet Computer has provided a list of dApps in its ecosystem in its website. At the time of writing, there were 75 dApps in categories like DeFi, wallets, socialfi, NFT, and the metaverse. A developer has even built Windows IC, which mimics what a Chromebook can do but for the Windows OS. Internet Computer’s website also runs on this blockchain.
Most of the listed dApps are still in the development phase although some are already being used. For example, DSVR is disrupting social media platforms like Reddit using IC’s technology. It has over 175k registered users, and according to SimilarWeb, it had 321k visits in January.
Other top dApps in Internet Computer are Distrikt, which has about 110k users and Kinic, which has done over 3 million searches. Kinic is disrupting search engines like Google and Bing while Distrikt is also a social media app. Other dApps in the ecosystem are OpenChat, Internet Identity, and Dank.
So, will these Web3 platforms succeed? It is hard to tell. But as I explained above, I believe that Web3 apps that seek to radically change how people interact with the internet will be a niche product. Why use DSCVR while there is a bigger community in Reddit? This is also in line with what I feel about disruptor social media platforms like Truth Social and Gab.
ICP price prediction
Moving to the daily chart, we see that Internet Computer’s ICP has been in a slow comeback after it crashed to a low of $3.46 in 2022. It rose and reached a high of $6.33 this month. The coin has moved slightly above the 50-day and 100-day moving averages, which is a bullish sign. However, the bullish momentum has faded while volume has continued to decline.
Notably, it seems like longs are now liquidating their positions at a faster pace than shorts, as shown below. Therefore, there is a likelihood that the ICP price will continue falling in the near term as concerns about the Federal Reserve remains. If this happens, the next key level to watch will be at $4.60, the highest point on December 5.