What’s ICON all about and how does it work?
ICON (ICX) is very different from most cryptocurrencies. Its primary goal is to create a unifying system for the administration and integration of unlimited numbers of blockchains of any size.
It might integrate the entire bitcoin blockchain, a country’s national healthcare blockchain elsewhere, and a single company’s or single person’s blockchain in one place and in different ways.
It’s an ambitious system comprising of elements of decentralized governance, ID verification, machine learning, its own decentralized exchange, the ICON ICX token and more.
This guide explains where and how to buy ICX, and breaks down how ICON works so you know exactly what you’re getting into.
Where to buy ICON
How does ICON work and what’s it all about?
ICON is mostly about unifying separate blockchains of all kinds within a decentralized governance structure, powered by ICON’s own unique blockchain system called loopchain.
Loopchain has the flexibility to encompass a practically infinite number of different rulesets, consensus systems and features, depending on what’s needed where.
It does this by operating in different circles, each of which has its own nodes that connect to the loopchain.
- The individual nodes. These are what they sound like. These are how individuals connect to the loopchain in order to make transactions and connect to as many community nodes as they need to.
- Community nodes. These are nodes that represent groups of any kind. For example, there might be a community node for a single hospital that’s used to manage patients and communicate internally. There might also be a larger community node for the entire regional healthcare network to manage communication between hospitals. Community nodes are connected to individual nodes, and can also connect to the ICON Republic as a whole.
- The ICON Republic. This is the entire ICON ecosystem, comprised of all of the community nodes.
These nodes can connect in different ways. You can have inter-community nodes, connections between individuals and communities and connections between community nodes and the Republic.
The end result is almost limitless applications. For example:
- An individual can use their personal node to make blockchain transactions.
- An individual can connect to their bank’s community node to take out a smart contract home loan, which automatically and transparently adapts to market rates.
- Hospital nodes might connect across the world to immediately and securely communicate confidential patient information if someone is injured while travelling.
- An industry association might run a secure and anonymous vote, by polling individual business nodes within that industry.
- A business might operate several different community nodes, including a private one, a node for executives decision-making only, different nodes for each office or each country and a public business-wide node. Each can have whichever features and applications they need.
- (Someday) the European Union might operate its own community node to take secure and anonymous member votes. It might also have a community representative connected to the ICON Republic node to vote on the currency’s future direction, in line with the Union’s regulatory or economic needs.
ICON provides a way to allow almost anyone to unlock whichever blockchain features they need or want, in almost any way.
The ICX currency
The total supply of ICX is 800,460,000, with about half of it being released to the public in the ICO and the remainder kept for future development.
ICX doesn’t currently have any kind of token creation. Instead, it has a balance of ongoing deflation and inflation.
- Deflation – Transaction fees are currently set at 0.01 ICX to discourage DDoS attacks. The fees are put back into a secured pool.
- Inflation – Up to 20% of the total volume can be issued annually, taken back out of the secured pool with the consensus of the ICON Republic. This “right to issuance” is given to community node representatives, and any will be able to exercise it at any time. However, the extent of this right will be determined by a machine learning algorithm.
IISS: ICX machine learning algorithm
The IISS is the ICON Incentives Scoring System. It’s hard to find a balance between maintaining decentralization, and ensuring ample buy-in from informed decision-makers, so ICON will be using the IISS machine learning system to do it.
This determines the power of each voter through a system that considers factors including:
- ICX transaction volume – Larger ICX users will have more right to issuance.
- DEX transaction volume – The ICON decentralized exchange (DEX) will be a centrepiece of the system, and the algorithm will consider its liquidity and healthiness when determining rights to issuance.
- Freezing volume – This is an important factor. Community nodes have the power to freeze ICX funds in the DEX reserve pool. The amount of funds frozen on DEX will greatly affect the power of issuance.
ICX transaction volume, DEX transaction volume, freezing volume and a transaction fee will be used as important evaluation criteria for IISS.
ICON also has some of the advanced features you can expect to find with other new cryptocurrencies. Specifically:
- Smart contracts – ICON will be using its own smart contract system. To avoid network bloat, it will be operating the contracts in a secure offchain container. This is similar to the system that Ethereum’s working on with the Plasma update.
- Cross-chain functions – Loopchain can bridge multiple external blockchains, as well as all of the different community chains that will be operating within the ICON Republic.
- DEX – ICON comes with its own DEX (decentralized exchange). This functions a lot like other cryptocurrency exchanges, using smart contracts to more efficiently handle transactions. The main difference is that it’s integrated with ICX itself in various ways. For example, by using ICX as the main medium of exchange and having a reserve pool of frozen ICX.
- Identity verification – ICON aims to have built-in identity verification systems.
What to consider before buying ICON
Reasons to buy
ICON has attracted a devoted following and plenty of funding from a lot of big names. ICON is operated by a company called theloop, which was formed in a joint venture between several Korean universities and the DAYLI Financial Group.
Its partners also include key names like Ripple Asia, various levels of the South Korean government, Samsung and many more. ICON has some of the most serious backing of any cryptocurrency in existence.
It has already begun trials throughout Korea and has the potential to see very quick uptake as it starts being used for real world applications. Korea is widely regarded as the tech capital of the world, and it’s been extraordinarily fast to adopt cryptocurrency. It’s reasonable to assume that ICON will also be moving quicker than one might expect.
The first all-in-one cryptocurrency system to take off in Korea will almost inevitably become a big deal. That it’s acquired so many partners and so much buy-in from different industries and authorities in the region, suggests a high degree of confidence in its technology.
Any US-based cryptocurrency with equivalent US-based backing would be going a lot wilder than ICON was at the end of 2017. There are indications that ICON will be moving exceptionally fast and seeing a lot of exposure in the future.
On the other hand
All of this doesn’t necessarily mean that the actual price of ICX is ever going to balloon to the same extent as bitcoin. It’s set up to work alongside other cryptocurrencies and to work with other blockchains, rather than as a direct competitor.
This probably makes it a more reliable product. Having IXC work seamlessly on the DEX exchange will probably be enough to increase its value and give it a strong degree of inherent value as the full range of ICON features are rolled out.
The biggest question marks around ICON’s future might be the effectiveness of IISS, and whether the global market will ever take to such a powerful and largely-centralized blockchain solution. Despite any talk of a democratic ICON Republic, in the long run, it’s hard to imagine the voting rights being dominated by anything other than large financial institutions or governments.
There’s an enormous potential for abuse within the voting system, and the right of issuance is looking an awful lot like a license to print money. A lot of ICON partners are probably looking at the best way to optimize their IISS rating, and how to keep issuing the optimal amount of ICX back to themselves.
Many people would conclude that ICON is undemocratic, very centralized and thoroughly committed to maintaining the current status quo. Those characteristics might increase ICX prices. These features should also be considered by anyone who is deciding whether to buy ICX.