How Dfinity Could Give Ethereum Another Layer of Censorship Resistance

The Internet Computer, which the Dfinity Foundation plans to launch Friday, has the potential to make every facet of decentralized finance (DeFi) applications uncensorable – that is, if the project’s unusually bold claims hold up.

That could be extremely powerful for the most successful applications on Ethereum, but it could also mean that many of those apps ultimately migrate for good to The Internet Computer.

It also might turn out that none of that happens. Or that The Internet Computer turns out to be great but for something no one anticipates now – such is the course of big, strange new technology.

"We want people to abandon traditional IT and move all systems and services to smart contracts," said Dominic Williams, the chief scientist at Dfinity.

Read more: Dfinity Launches Uber-Ambitious ‘The Internet Computer’ After 5 Years of Development

The Internet Computer (TIC) is what Dfinity calls its new decentralized system for running all the applications we are familiar with from the open web as well as on blockchains like Ethereum and Binance Smart Chain.

The claims for The Internet Computer could not be larger. In a September blog post, the company described it as "a new type of blockchain computer with infinite capacity and performance that rivals the traditional cloud."

When we spoke, Williams said that Bitcoin created digital gold, inventing this whole market. The second big contribution was smart contracts, which Ethereum proved work. The Internet Computer offers the third step, which he called "infinite blockchain."

Any claims about infinite anything in computing are worth scrutiny. Regardless, it seems evident that there's a set of crypto enthusiasts who are eager to try their hand with this new system.

According to Seamus Conwell, a spokesperson for the foundation, it has raised $121 million, with investors including Andreessen Horowitz, Polychain Capital, Scalar Capital, CoinFund, Multicoin Capital and Greycfroft Partners. There was also a $61 million round in February 2018 that it considers ecosystem funding, rather than direct backing.

Dfinity also received a relatively strong vote of confidence from the most well-known crypto exchange in the U.S., Coinbase, which announced that Dfinity’s governance and utility token, ICP, would be immediately open to deposit on Coinbase Pro, with trading to follow once liquidity conditions have been met.

No one will be able to use their ICP tokens until the network goes live, but when it does, more than 50,000 people will hold ICP, according to estimates. The tokens allow users to buy computing power on the network and to participate in governance.

Adding resilience to Ethereum

Ethereum apps would be able to build their front-end websites on TIC. That could be a key step to make their applications more resistant to regulation and censorship.

"From a practicality standpoint, given kind of the unstoppable nature of Ethereum and the smart contracts, the only place they can try to censor this stuff is at the interface level," said Harrison Hines, the founder of Fleek, a company that helps users publish on the decentralized web.

TIC, he continued, "can host the front end and essentially the applications that are built on top of these smart contracts that are run on Ethereum."

As long as the interfaces that 99% of all participants use are hosted by cloud providers like Amazon and Microsoft, DeFi applications are vulnerable.

"You're not really interacting with a blockchain. You're interacting with a website that's interacting with a blockchain. You're interacting with Amazon Web Services," Williams said.

So TIC runs across a network of database centers, which are deployed around the world so that a website isn't actually hosted on one specific database center so much as it is hosted on several, perhaps dozens, of them.

Fleek started off by helping users get onto Filecoin, and now it's planning to help users run projects off TIC as well.

"Any static site can now pretty much out of the box just switch. Instead of hosting that on AWS or IPFS, they can now be hosted on a canister on The Internet Computer," Hines explained, and that won't require browsers to do anything different. In TIC parlance, a "canister" is basically a smart contract or an application.

By running on this decentralized framework, the front ends for a lot of Ethereum projects could potentially be much more difficult for governments or even the tech industry to regulate.

"The way things are right now you could say that Ethereum execution environments are subject to big tech governments," John Lilic, a ConsenSys alum and crypto investor, told CoinDesk. He pointed, in particular, to the de-platforming of the Twitter alternative Parler from Amazon Web Services as an example.

Most Ethereum apps run on similar infrastructure, Lilic said. And then there is staking. Many newer blockchains run a consensus system that's less computationally intense than Bitcoin's because they require validators to put assets at risk. Cosmos, Tezos and EOS all take this approach, and their nodes can all be easily run on cloud infrastructure.

"A lot of the proof-of-stake networks you see out there at the moment, they are really layer-2 applications on big tech clouds," Williams said.

And that's the direction Ethereum is heading.

Still, Williams made sure to say that Ethereum and TIC serve two different sets of demands.

"I think the Ethereum and the Internet Computer are different beasts. We should not be called an Ethereum killer. Without Ethereum, there would be no Internet Computer," Williams said.

How decentralized?

TIC may be decentralized, but it's not exactly permissionless.

Unlike other cryptocurrencies that have tried to start on consumer hardware, Dfinity went straight to data centers for this project, and those data centers can participate only if they have been voted in by network governance (holders who have staked the ICP token) and attained an identity on the network.

Further, TIC nodes can be run only on machines designed specifically for it. Bitcoin took a while to get to the ASIC (application-specific integrated circuit) machines that dominate it now, but TIC is going straight to custom hardware.

As the TIC's documentation explains:

"The computers that make up the virtual machine are organized into sub-networks of data centers around the globe. The distributed architecture enables secure communication without firewalls or technologies that are vulnerable to attack. Independent data centers receive remuneration for contributing computing capacity and hosting services to support applications running on the Internet Computer platform."

The upshot of that is that it won't be possible for any one data center, or even a group, to kick a particular website or application off its network. Even if a government shut down all the data centers in one country, an app could keep running elsewhere. That eliminates the risk of one company deciding unilaterally that it no longer wants to be known as hosting a certain product.

Nevertheless, permitting large amounts of computing power to join the network one by one is different from the original vision of Bitcoin, which made itself resilient by allowing anyone to join the network, confident that it had a system that could not be corrupted by malicious participants.

Dfinity says it will launch with 48 data centers on three continents, housing 1,300 nodes. Williams argues that this approach allows it to become much bigger and run with much greater performance.

"In these Bitcoin and Ethereum networks, when you add more nodes it doesn't increase throughput, it just increases security," Hines said. But data centers should be able to quickly add on more power as needed. "That's how the current internet grew," he said.

Beginning with websites

TIC is a big, complex project that brings a lot of new technology and new ways of engaging to the table.

Hines said the early successes for TIC will come from one of the most demanding kinds of applications, social networks. Before the launch, Dfinity announced that it had built a TikTok alternative called CanCan. There's another one coming called Open Chat.

For the Ethereum community: TIC could be a great way to further decentralize Ethereum's successful DeFi and non-fungible token ecosystems, but it might also be a good place to port them over.

In particular, Lilic noted that TIC is built from the start to run the Web Assembly or WASM standard, which opens it up to a lot of developers who don't need to learn anything new. "Giving the developer a way to write in whatever programming language they want and boom it compiles down, it's very powerful," Lilic said.

But Lilic agrees that Dfinity’s claims are somewhat disconcertingly large and that they won't be verified until the thing is live and folks can start trying it out. He also warns that everyone should expect a lot of bugs early on, because that's the natural order of new and complex software machines. Williams agreed with that, and TIC will launch as a beta product.

But still, the team seems confident and appears smart enough to know that a brave face and spin aren't enough to keep applications running. So Dfinity might have very good reason to believe it will deliver as promised.

"If what they are saying is real, it could just eat everything. There could be the only things that are left are Bitcoin and Dfinity," Lilic said.