Unlock exclusive research & insights you need to navigate the crypto space with confidence

Simply Explained: Cosmos (ATOM)

April 15, 2022
April 15, 2022

What is Cosmos trying to do?

Simply put, the team at Cosmos is looking to solve the scaling and fragmentation problems that currently plague the crypto world.

Scalability issues, such as speed, affordability and accessibility make it difficult for beginners to enter the crypto space.

Interoperability (the interaction and communication between blockchains) is fragmented. We consistently see blockchains pop up but often, nothing gets built on them due to the difficulty of entry for developers.  

Fragmentation and Interoperability

Remember when you were a kid and half of your friends were on XBOX, and the other half were on PlayStation? It sucked right? It would be so much better if, regardless of what platform they were on, you could play the game with them. 

Well, this is what we mean by fragmentation. There are lots of blockchains out there, but very few of them can interact with one another.

Cosmos is making blockchain technology less complex for developers, by using a modular framework that simplifies decentralized apps.

They are also using something called an “Interblockchain Communication protocol.” This basically means they’re making it easier for blockchain networks to communicate with each other. This should, in theory, fix the issue of fragmentation that we went over in our gaming console analogy.

Speed and affordability

Like other projects in the space, Cosmos is looking to innovate past the proof of work (PoW) mechanism for verifying transactions. At this point, we are all aware of why PoW is so inefficient. Cosmos is looking to solve this issue through many scalability measures.

Cosmos, like many other modern projects in the cryptocurrency space such as Solana and Cardano, seeks to solve the issues of PoW by using a proof of stake (PoS) mechanism. 

Users stake their ATOM tokens, and in return, they can operate a Validators’ node. As a reward for staking their tokens, they earn a percentage of every transaction that’s processed. A nice addition that Cosmos has implemented for security purposes is that if nodes are found to be acting dishonestly they are penalised and lose their tokens. Also, the more ATOM tokens you choose to stake, the more likely you are to be chosen to validate.

Blockchain 3.0

Cosmos’ mission is to ensure that its infrastructure is easy to use. Its software development kit (Cosmos SDK)  focuses on transferability. This means a network can be easily built using code that’s already out there. It doesn’t need to be built from scratch.

The Cosmos SDK & Tendermint

The Cosmos SDK (software development kit) was used to build some high-value projects. However, activity on Cosmos does not add a lot of value to its native token ATOM as there is not a lot of value accrual other than the purchase of the token for utility/governance/staking purposes. As a platform for settling transactions and building blockchains, it’s great. However, the real beneficiaries of Cosmos are the projects that are built using the technology.

Cosmos uses the Tendermint BFT (Byzantine Fault Tolerance) engine – an algorithm that allows developers to create custom blockchains on the Cosmos Hub, the intermediary between all blockchains on the Cosmos Network, without having to code them from scratch.

Share your thoughts below.

Disclaimer: NOT FINANCIAL NOR INVESTMENT ADVICE. Only you are responsible for any capital-related decisions you make and only you are accountable for the results.

Adam Saddique

Post a Comment