  We present an analysis of the Internal Shock Model of GRBs, where gamma-rays
are produced by internal shocks within a relativistic wind. We show that
observed GRB characteristics impose stringent constraints on wind and source
parameters. We find that a significant fraction, of order 20 %, of the wind
kinetic energy can be converted to radiation, provided the distribution of
Lorentz factors within the wind has a large variance and provided the minimum
Lorentz factor is higher than 10^(2.5)L_(52)^(2/9), where L=10^(52)L_(52)erg/s
is the wind luminosity. For a high, >10 %, efficiency wind, spectral energy
breaks in the 0.1 to 1 MeV range are obtained for sources with dynamical time
R/c < 1 ms, suggesting a possible explanation for the observed clustering of
spectral break energies in this range. The lower limit to wind Lorenz factor
and the upper limit, around (R/10^7 cm)^(-5/6) MeV to observed break energies
are set by Thomson optical depth due to electron positron pairs produced by
synchrotron photons. Natural consequences of the model are absence of bursts
with peak emission energy significantly exceeding 1 MeV, and existence of low
luminosity bursts with low, 1 keV to 10 keV, break energies.
