Cycles act as the computational resource to execute actions on the Internet Computer blockchain. In general, all canister smart contracts consume resources in the form of CPU cycles for execution, bandwidth for routing messages, and memory for persisted data. Canisters maintain an account balance to pay for the cost of communication, computation, and the storage consumed by their applications. The cost of computation is expressed in units of cycles.
Cycles reflect the real costs of operations, including resources such physical hardware, rack space, energy, storage devices, and bandwidth. In simple terms, a cycle unit represents the cost of executing a single WebAssembly instruction. Cycles are not a currency; they cannot be converted back to value in the form of Internet Computer Protocol tokens, but can be transferred between canisters to enable canisters to pay for operations. The ICP to cycles conversion rate is determined through an NNS proposal that repeatedly refreshes throughout the day.
By setting limits on how many cycles a canister can consume, the platform can prevent malicious code from draining resources. The relative stability of operational costs also makes it easier to predict the cycles that are required to process a million messages.
Cycles can be compared to “gas” for Ethereum and “credits” for AWS, but have much farther reaching uses with regard to data, compute, and execution. Their design also inherently accounts for technological pitfalls, such as rapidly rising costs of usage. Whereas the Ethereum blockchain requires end users to send payments for the gas smart contracts consume with every transaction, on the Internet Computer, Canister smart contracts are pre-charged with cycles, such that contracts effectively pay for their own computation - freeing users from the responsibility.
You can create a cycles wallet through the Cycles Faucet and earn free cycles.
And from our step by step guides, learn how to add cycles to a wallet: