What Is Cosmos (ATOM)?

Cryptocurrencies fluctuate in popularity as well as price. However, some notable blockchains and coins have remained at the top of the rankings for some time now, including Cosmos and its native coin ATOM. But how exactly does Cosmos work, and what can you do with ATOM?

What Is Cosmos?

Image Credit: Satheesh Sankaran/Flickr

Cosmos began with Tendermint, a Byzantine fault tolerance (BFT) engine. Using a BFT engine (which is proof of stake by nature), a network can continue to operate even if some of its nodes are shut down or controlled by malicious actors. Tendermint was created by Jae Kwon, a blockchain software architect, along with Zarko Milosevic and Ethan Buchman. Kwon stepped down as CEO in 2020 but still acts as the company’s principal architect.

Tendermint stood as the gateway to the Cosmos Network. Because Tendermint is a consensus algorithm, it was incorporated into Cosmos when the blockchain itself was launched. Today, Tendermint isn’t the only BFT engine that serves Cosmos, but it is still the most commonly-used engine on the network and plays a major role in keeping the network safe and secure.

The Cosmos whitepaper was published in 2016, and the Cosmos software itself was launched in 2019. An ICO (initial coin offering) was also launched in 2019, which raised $9 million for project development. A previous ICO was launched for Cosmos’s ATOM, but we’ll get to that a little later.

How Does Cosmos Work?

Cosmos has been described as the “Internet of Blockchains.” This is because the company’s goal is to create a network of connected blockchains that communicate with one another. Giving distributed ledgers the ability to interact allows assets to be transferred from blockchain to blockchain and transactions to be streamlined.

The key focus of Cosmos is interoperability. This term refers to the ability of two systems, such as two networks or two apps, to interact.

Cosmos uses something called an IBC protocol to make this possible. An IBC, or Inter-Blockchain Communication protocol, allows blockchains to interact in a reliable and authenticated way. Using an IBC protocol enables atomic swaps, token transfers, data sharding, and multi-range smart contracts. In short, it tackles the various kinds of operational limits experienced by blockchain networks. Less isolation means fewer limitations.

Isolation is a major theme in blockchain technology. For example, blockchains cannot access external data sources without using extra tools, specifically a blockchain oracle. The Chainlink network is an example of a blockchain system that uses oracles to access external data.

Tackling Scalability Issues

Cosmos also has a focus on scalability. This refers to the ability of something, in this case, a blockchain network, to scale effectively as traffic and demand increase. Scalability limitations are a big issue in the crypto realm, with popular assets, such as Bitcoin, suffering long transaction periods and high fees due to the extremely high level of transactional traffic on the network.

These days, many blockchain developers take scalability very seriously. As time passes, any given blockchain may receive increasing user numbers, resulting in a higher transactional load. Each transaction on a blockchain must be verified, usually by a miner or validator, and must remain in the pending queue until it is fully confirmed. If a blockchain, or group of blockchains, is designed to be scalable, an increase in transactions shouldn’t have a huge effect on transaction times or fees.

This is the case with Cosmos. Using the proof of stake mechanism (in conjunction with the BFT engine), Cosmos can more effectively scale its operations without compromising on fees and waiting times. This is one of the reasons why the hugely popular Ethereum blockchain began switching from proof of work to proof of stake in September 2022 in its highly anticipated 2.0 Merge.

Using Cosmos, developers can make blockchain-based apps (or decentralized apps) more simply. Blockchain technology can be very intimidating, and there’s definitely a need for easier solutions. Using Cosmos’s simple structure, developers can more easily create blockchains that can interact with other blockchains in the ecosystem. So, how does this work?

Cosmos’s Structure

Cosmos also uses zones and hubs in its infrastructure. Cosmos’s zones are application-specific blockchains that developers can create on the network.

Hubs, on the other hand, act as routers for the zones. When a zone connects with one hub, it gains interoperability. The “Cosmos Hub” was the first blockchain launched on the network. It is the main hub of Cosmos and keeps track of all the blockchains’ states within the Cosmos infrastructure. It also acts as the network’s proof of stake consensus mechanism. The zones and hubs work together to create the entire Cosmos ecosystem.

Cosmos’s hub framework is also decentralized, which attracts open-source developers to the platform. What’s more, a decentralized network can offer higher levels of security by spreading power across various connection points (or nodes).

The Cosmos ATOM Coin

blue graphic with upward arrows and cosmos logo
Image Credit: Satheesh Sankaran/Flickr

As is the case for all cryptocurrency blockchains, the Cosmos network has a native coin known as ATOM. An ICO was held for ATOM in early 2017, wherein $17.63 million was raised through the sale of ATOM tokens.

Cosmos also uses a mechanism known as governance, which allows users to vote on proposals, such as network updates or common issues. Users must stake their ATOM funds to vote in the governance process, with the number of ATOM staked determining how much voting power you have. The more ATOM you stake, the greater your voting power.

Cosmos’s governance mechanism takes place via the Cosmos Hub, as it relates to the proof of stake mechanism (hence why you need to stake to take part).

ATOM’s price is constantly fluctuating and stands at just over ten dollars at the time of writing. ATOM reached a peak price of $44.26 in late 2021 but suffered dramatically in May 2022 amid a market-wide crash that affected almost every crypto out there. ATOM isn’t pegged to or backed by anything, so its value is naturally quite volatile, which is worth noting if you’re interested in buying this crypto.

cosmos atom all time price chart usd

You can buy ATOM on a wide range of cryptocurrency exchanges, including Binance, Kraken, Huobi, and Coinbase. This crypto can also be staked on a number of platforms, including exchanges and wallets. Guarda Wallet, Trust Wallet, and Binance are all examples of platforms on which you can stake your ATOM holdings to gain rewards.

Cosmos Tackles a Range of Important Issues

Cosmos is designed to mitigate various blockchain-related issues, such as scalability limitations, the difficulty of use, and chain isolation. This creates a more accessible and versatile blockchain network for developers and ATOM holders alike. And, with the use of governance, Cosmos users can have their say in how the network progresses.

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