The persistent growth in crypto has exhibited dynamic features among different networks. One topic of interest in this discourse is Cosmos- a network that enables different blockchains to communicate adequately. In this article, we will be stepping into the world of Cosmos and why it is so special.
What is Cosmos?
Cosmos is a decentralized network consisting of different united blockchain networks that provide ease of transactions between them. Due to this cause, they have been tagged the “Internet of blockchains”. Cosmos sets to curb the issue of poor scalability and allows blockchains to process enough transactions per second. It also aims to continue this movement with sovereignty. This means that the network is decentralized without any intermediaries overseeing transactions. More importantly, Cosmos solves the problem of poor interoperability.
This issue is birthed when two or more systems are unable to communicate with each other. It is easy to see why interoperability could be a problem. When systems are created, they are often developed to interact with similar systems easily. For instance, connecting your iPhone, which uses IOS as an operating system, to a MacBook using the same operating system is not so tasking. However, connecting a MacBook to a Samsung of android operating system would be more difficult. There are just so many systems available, and building your system to interact freely with many other systems can be challenging. However, Cosmos has brought the interoperability of networks in a different light.
Who created Cosmos?
Cosmos was developed by Jae Kwon, with Ethan Buchman being the co-founder in 2014. Jae Kwon is a software architect that had his big break into the crypto space when he co-founded Tendermint. Tendermint is a software that enables developers to write application codes in any language. The connection between Cosmos and Tendermint lies in the fact that Cosmos is built on Tendermint. The ability of Tendermint to write apps in different languages accounts for Cosmos interoperability. After co-founding Tendermint, Jae Kwon led the development of Cosmos. Cosmos CEO was later replaced by Peng Zhong after Jae Kwon gave up his position in 2020.
Consequently, Cosmos’ first-ever blockchain, Cosmos Hub, was launched in 2019. Cosmos was a trailblazer for many other networks that would join the Cosmos network. Another significant help in the growth of Cosmos came from Tendermint’s $20 million growth fund launch. The Interchain Foundation was also a major catalyst in the development of Cosmos. They help developments to grow through grants, and investments, among other means. They have embarked on projects like Tendermint and Cosmos.
What is ATOM?
ATOM is Cosmos’ official native token. It is an important tool in maintaining the interoperability of the Cosmos network. But how is a token responsible for the efficiency of a blockchain. This is possible through a process called staking. When coins are staked, they are stored by users over a period. Users’ coins are then used to maintain the blockchain. However, the users are chosen at random. They are compensated with rewards of interest on the initial amount staked.
Apart from blockchain maintenance, ATOM is used for regular transactions on the network. It can be bought, sold, and swapped. The ATOM token is also used to pay fees required by the Cosmos network from users when undertaking certain operations like transacting or building decentralized applications.
At the time of writing, ATOM has a price of $7.468 and a market cap of $2,136,265,422. This is a good leap from its initial price of $0.10 when it was released in November 2020.
How does Cosmos work?
Since Cosmos is quite distinct, its mechanism can be a bit difficult to understand. But is it that difficult? Let’s get into it!
Cosmos uses the Proof of Stake (PoS) as its consensus mechanism. This is a great contributor to the network’s scalability and ease of transactions. For people conversant with Cosmos, it is common knowledge that the network’s unique feature is letting different blockchains communicate with each other easily. This is made possible through the Inter-Blockchain Communication Protocol (IBC).
IBC is a medium for different ledgers to communicate with each other. However, these ledgers don’t have to communicate directly. How IBC achieves seamless communication among blockchains is that packets of information are sent from one source to another through smart contracts. But these packets are sent through messengers to deliver information to the other party. So you can see that IBC communication delivery is not necessarily direct. The information transferred between sources is usually tokens for transactions.
Remember when we discussed the problem of interoperability earlier in the article? Generally, when developers create blockchains, it is hard to optimize their blockchain to communicate with all other blockchains efficiently. That would mean that they will program their blockchain with many other blockchains in mind. Achieving this would be rather difficult and expensive for a network. IBC stands as a medium to pass whatever data that a blockchain would like to send to another. Hence, two dissimilar blockchains transferring information might not be so daunting.
It is a good note that there would be no Cosmos without Tendermint. Tendermint is a blockchain network that Cosmos is built on. Tendermint is also a building area for many other blockchain applications. It allows seamless development making creating applications convenient. With this blockchain, the tasking parts of setting up your application are taken care of, making things easier for developers. Tendermint Core is a consensus engine of Tendermint. It manages the recording of transactions on various systems. Generally, Tendermint is a breakthrough for the crypto scene as it allows decentralized applications to be written in any language and streamlines the process of development for users.
What is ATOM used for?
So far, ATOM has proven to be an important element to Cosmos. But we have not truly dived into the uses of Cosmos. Here are the main uses of Cosmos.
- Eliminate attackers: The ATOM token is used to ensure the network’s security through spam prevention. Spam transactions could make the network unbearable for users as they could cause congestion. A hacker’s aim in this sense would be to congest the network by making many transactions. Fees paid on the network are usually used for this cause. An attacker would have to pay a huge sum, thereby discouraging them from proceeding. The fees are paid as compensation for the amount of computational effort that the network does on the network. This is quite similar to gas fees paid on the Ethereum network.
- Staking: Staking is another way of maintaining the network’s security in a similar way to paying fees to prevent spam. This practice is common among networks using the Proof of Stake (PoS) consensus mechanism. Regular users can lock up their ATOM tokens, and the network could pick at random which user’s token to use for regulation. Such users will then be rewarded with interest as compensation for using their tokens. Generally, the higher an amount is staked, the better the network’s security. In the case of staking, both parties win. While users of the network might see it as an investment opportunity, it is also a great way to maintain a network’s security.
- Voting: Holders of the token, ATOM, can decide on the network’s activity by voting. The weight of their votes is usually determined by the number of coins they have staked. The higher the coin, the higher the authority. Hence, crypto whales typically gain the most power in a network and have a big influence on the happenings of a network.
Is ATOM a good crypto investment?
ATOM crypto, the official token for the Cosmos blockchain network, has experienced its fair share of gains and losses in the crypto market. From September to late October 2021, ATOM hit an all-time high of $44 (about 426% gains). In December, it crashed down to $21, then made a recovery to reach $43 in that same month. Currently, ATOM’s price is about $6 due to the current bear run in the market.
Different experts predict ATOM’s price in the coming years to reach $150 to $300. Although, some strongly maintain the stance that ATOM’s price may not exceed $150 by 2030. The ATOM token has shown much potential over time. This means that it might be a potentially beneficial investment. Of course, the market moves and predictions might not always be accurate. Hence, it is better to do your own research on the market before investing.
Also, decide if you are ready to HODL long-term based on the predictions given. This will make you know whether you really want to invest in the ATOM crypto network.
Generally, the Cosmos blockchain network is scalable and interoperable. ATOM, which is the Cosmos token, has done amazingly well over time. However, it is currently experiencing a bearish trend, experts predict that it will go bullish before the end of 2022 or in 2023.
Regardless of whether it is going bullish or not, the Cosmos network has amazing potential to do well in the cryptocurrency sphere.
Ebiere Watchman is a prolific writer specialized in web 3.0 and finance. Ebiere’s experience includes research projects, sales copywriting, and storytelling. She prides herself in crafting impeccable content to drive mass adoption in cryptocurrency.