What is ICON Cryptocurrency? | The Ultimate Beginner’s Guide
ICON is a blockchain interoperability platform designed to connect multiple blockchains together via smart contracts, while still maintaining each individual blockchain’s unique properties, such as consensus mechanisms and incentive systems. The ICON project aims to build one of the largest decentralized networks in the world.
In this beginner’s guide to ICON, we’ll cover:
- What is ICON?
- How Does ICON Work?
- What Does the ICX Token Do?
- How to Buy ICON (ICX)
- Best ICON (ICX) Wallet
By creating a massive platform in which existing blockchains — both public and private — can communicate with one another, ICON looks to be the center of an interconnected blockchain ecosystem. Accomplishing this goal of interconnecting all blockchains would do to blockchains what the internet did for the personal computer. On top of interoperability, the ICON network will also support decentralized applications, much like Ethereum, or Cardano.
The word “center” may seem awfully close to “centralized” for a lot of sensitive cryptocurrency enthusiasts, but ICON remains cognizant of this. Blockchains connected to the ICON network are able to function under their own independent governance and incentive systems. There are no barriers to entry; anyone can create a new blockchain project and join the network. New blockchains are free to connect with existing blockchains, thereby creating a new type of blockchain multiverse.
ICON isn’t the first project to tackle blockchain interoperability; notable projects working towards the exact same goal include Aion and Wanchain. As of right now, these projects are not competitors. Rather, all three of these projects (ICON, Aion, and Wanchain) are members of the Blockchain Interoperability Alliance — a group effort towards promoting interconnectivity between isolated blockchain networks. This alliance was formed so that all three of these projects could collaboratively research interchain transactions and communication. That being said, it is worth noting that no formal contracts are keeping this alliance in place; this is a completely informal initiative subject to dissolve at any time.
The ICON Team
ICON boasts a total of 46 members on its team and has many departments spanning across blockchain development, artificial intelligence (A.I.), and design/communications/security. That number does not include ICON’s advisory team, nor members of the ICON foundation — a Switzerland based non-profit set up to support the growth of the ICON network.
Although officially not connected, ICON has the support of Seoul based private blockchain firm theloop, and parent company DAYLI Financial Group — the largest fintech holdings company in South Korea. For all intents and purposes, theloop and DAYLI may as well be connected; although Min Kim, CEO of DAYLI Financial Group and ICON foundation council member, goes out of his way to say otherwise in interviews. Theloop’s engineers are building the ICON blockchain and donating it to the non-profit ICON foundation. Semantics? We’ll leave you to decide that for yourself.
The support ICON receives from theloop, and in turn, parent company DAYLI Financial Group, has lead to real-world partnerships with major financial institutions, universities, and medical institutions in South Korea. ICON believes these ongoing real-world use cases separate their project from the highly-theoretical vaporware seen throughout the cryptocurrency and blockchain industry.
At its core, ICON is a multi-channel blockchain based off loopchain technology. Loopchain is a customizable high-performance enterprise blockchain with smart contract features. A product of theloop, loopchain was developed with flexible customization in order to fit the needs of a diverse group of industries. By using a Loop Fault Tolerance (LFT) consensus mechanism, loopchain is said to support quick, fork-less consensus.
LFT is a modified version of Practical Byzantine Fault Tolerance (PBFT), or more specifically, another take on Tendermint, a consensus algorithm that combines PBFT with delegated Proof of Stake (DPOS) . The basics remain the same: leader nodes take turns proposing blocks of transactions and voting on their validity. A block is committed once more than 66% of validation nodes are in agreement on the block’s validity. In a vanilla PBFT network, all votes hold the same weight regardless of which node is making the vote. In Tendermint, votes are weighted based on the amount of tokens being staked by the delegate.
ICON’s LFT diverges from Tendermint for the sake of efficiency, reducing the amount of steps involved in the consensus process. LFT uses a technique called “spinning” which claims to simplify the algorithm used to select primary nodes (the leaders responsible for broadcasting blocks to validation nodes). The only official documentation on ICON’s LFT consensus mechanism outside of the ICON whitepaper is this whitepaper written in Korean. The best unofficial guide to LFT we found was written by “2infiniti”, and can be found here.
Understanding exactly how ICON transactions function can get a little messy due to the number of moving parts involved. The convoluted language found in the whitepaper doesn’t help, either. The most elegant summary of all the parts comes in the form of a single paragraph by Steemit member g-dubs, emphasis mine:
A Community is any network of nodes that uses the same governance system. The C-Node, or community node, is responsible for consensus and decision-making for that particular community. A C-Rep, or community representative, represents both the Community and ICON Republic, and can vote on governance of both. The ICON Republic connects all the communities. And Citizen Nodes are components of the ICON Republic. Anyone can participate, but you do not have voting rights for the governance.
The ICON network uses a decentralized exchange (DEX) to facilitate cross-currency transactions made on its platform. A decentralized exchange automatically executes trades between buyers and sellers on a blockchain. This is distinct from a centralized exchange, which serves as a middleman between both parties. ICON’s DEX is scheduled to debut sometime in Q2 2018.
Here’s how all these parts work together within ICON to produce a cross-platform transaction:
Blockchain 1 (B1) initiates transaction with Blockchain 2 (B2):
- B1 token is processed by C-Rep which interacts with Nexus (loopchain) and transfers the asset.
- Nexus uses AI model to algorithmically determine value of B1 token in relation to current value of ICX.
- Decentralized exchange then converts that amount of ICX to B2 token.
- B2 C-Rep receives amount of their own token which represents B1 asset.
As you can see, ICX is used as a means to transfer the value between one token to another, cross-chain, before finally being exchanged for B2’s native token via DEX.
ICX is used within the ICON ecosystem as a bridge currency to facilitate transactions between unique cryptocurrencies. An example of this is detailed above where ICX is used to capture the appropriate value of a token before exchanging that same value for a different token. ICX is also used to pay for transaction fees, and as tokens for decentralized applications built on top of the ICON network. In this way, within the ICON network, ICX functions similar to how ETH does inside of Ethereum.
While the ICX currently distributed is an ERC-20 token, an exchange will take place in the near future in which holders of the ERC-20 tokens will be able to swap for usable ICX tokens compatible with ICON’s native blockchain. The official date for this swap has not yet been announced, but it is expected to take place sometime in March 2018.
If you’re looking to add some ICX to your portfolio, you’re going to want a Binance account. Binance represents just under 90% of total ICX trading volume according to CoinMarketCap.com. If you don’t have a Binance account, Huobi and Gate.io are smaller exchanges currently trading ICX.
Learn more about Binance in our Binance Review and User Guide.
In its current state, ICX remains an ERC-20 token that will eventually become exchangeable for native ICX. ICON has not yet released any information on how ICX holders should handle custody of their tokens once the token swap process is completed. Until then, ICX tokens can be stored just like any other ERC-20 token; ERC-20 compatible wallets (like MyEtherWallet or MyCrypto) and compatible hardware wallets, such as the Ledger Nano S, are good choices.
UPDATE: The official ICONex wallet has been released in the form of a Google Chrome extension. Currently in beta, ICONex will serve as the go-to wallet for storing ICX tokens once the token swap is completed.
ICON is an ambitious project aiming to interconnect the growing blockchain landscape. The ability for blockchains to communicate with each other, despite core differences in blockchain architecture, presents an exciting, diverse future for the world of blockchains. It remains to be seen whether ICON will be the platform to achieve this goal. ICON, and similar blockchain interoperability platforms, are too early in development to choose a clear favorite at this point in time.