ICON (ICX) is one of several cryptocurrencies addressing the problem of interoperability – the ability of blockchains to communicate with each other. In this article, we’ll look at why interoperability is important, what ICON does, and what challenges it may face.
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ICON is a blockchain network for decentralized applications that aims to build a kind of interconnected community. It’s a relatively under-the-radar crypto, even though it’s been around for several years. But the transition to ICON 2.0 last year could make it one to watch.
- What it does: ICX is the utility and governance token for the ICON network.
- Management team: Founded by the ICON foundation in 2017.
- Market cap: Around $555 million (CoinMarketCap, March 15).
- Availability: Several major U.S. cryptocurrency exchanges, including Binance.US and Kraken.
Why interoperability matters
Since the birth of Bitcoin (BTC) in 2009, the cryptocurrency industry has evolved dramatically. Where Bitcoin offered a decentralized form of digital money, Ethereum (ETH) and other smart contract cryptos are programmable ecosystems that could revolutionize aspects of the whole finance industry. But it is still very early days for crypto, and there are several big hurdles the industry needs to overcome.
For example, Ethereum’s network struggles with heavy congestion and high gas fees. It also works in a silo – it doesn’t communicate well with other blockchains. This wouldn’t be such an issue if everything was built on Ethereum. But as the high fees push more projects onto Ethereum alternatives, interchain communication becomes increasingly important.
The other big players in interoperability are Cosmos (ATOM) and Polkadot (DOT). Cosmos gained around 400% last year, while Polkadot and ICON gained about 185% and 165% respectively. Each one has approached the problem of interoperability in a different way. For example, Polkadot uses something called parachains to enable different networks to connect with one another. ICON says it doesn’t need parachains, and can work with any smart contract blockchain. ICON and Polkadot announced last December that they would work together to help developers build cross-chain applications.
Bridging to the real world
Not only does ICON aim to connect different cryptocurrency networks, it also wants to connect cryptos to the real world. According to its whitepaper, it is already linking up various entities including banks, securities firms, insurance companies, hospitals, and universities. Cryptocurrencies that have real-world use cases are always worth investigating, as many projects focus only on solving problems in the blockchain world.
ICON’s digital ID platform, MyID, allows users to manage their IDs from their phones with over 80 organizations in South Korea. For example, right now you probably have different login credentials for your bank, online shopping, cryptocurrency accounts, and much more. Each is saved on that organization’s system. An app like MyID would give you one login that you control and can use to connect to various accounts.
Should you buy?
Always do your own research before you buy any coin or token. Only you know your financial situation, investment strategy, and tolerance for risk. Cryptocurrency prices have been hard hit by wider economic and geopolitical factors in recent months, and there’s still a lot of uncertainty. These are high-risk and unpredictable assets, and we could be in for a prolonged period of price stagnation or even further drops. This is why it’s important to only invest money you can afford to lose. Look for investments with solid fundamentals that are well-positioned to survive and perform well in the long term.
ICON is an interesting project that solves a major problem in the blockchain world. It has several real-world partnerships, and has already gained ground in South Korea. It’s also expected to make some big steps forward with its technical development in the coming weeks and months.
However, even in last year’s crypto boom, ICON was unable to regain its all-time high of 2018, and did not perform as well as its competitors. Some see this as an opportunity, while others are concerned it hasn’t been able to grow fast enough. For sure, ICON isn’t as well known as Cosmos or Polkadot, and is much farther down the crypto charts in terms of market cap. Like with many evolving blockchains, the proof will be in the pudding – it’s often only when a network starts to grow dramatically that we see if it can really deliver and whether it has any security flaws.
Ultimately, interoperability is crucial for crypto, and is an area to pay attention to. ICON has some key partnerships, and is certainly a contender. But it’s hard to know if it can gain ground and establish itself as the best interoperability solution.