What is Cosmos (ATOM)?
What is Cosmos (ATOM)?
Cosmos, heralded as an Internet of Blockchains is an ecosystem of interconnected services and apps with the objective of use within the decentralized space. This is achieved via the Inter-Blockchain Communication Protocol (IBC), which enables users to exchange data and assets across individual decentralized blockchains.
The Cosmos Hub, which is the first blockchain of the Cosmos network, is governed and secured by the ATOM token. The goal of the token is to provide economic security for the public blockchain.
Who is the Founder?
The creation of Cosmos was through the cooperation of several teams. However, the initial funds and resources for its creation were allocated by the Interchain Foundation (ICF) and the Tendermint team. The Interchain Foundation is a non-profit organization that supports and funds open-source blockchain projects.
That said, the Cosmos network was initially developed in 2014 by Jae Kwon and Ethan Buchman at the same time that they were developing Tendermint. Tendermint is the consensus algorithm that would hold Cosmos together. Tendermint connects applications through the Application Blockchain Interface protocol.
In 2016, Buchman and Kwon also co-authored the Cosmos white paper.
Over the years, the development team has grown to include several contributing teams. The core development teams include:
- Informal Systems
- Interchain GmbH
- IRIS Network
- Regen Network
Cosmos is supported by the Interchain Foundation.
How does Cosmos (ATOM) Work?
As already stated, the Cosmos network is an ecosystem of apps and services and it achieves this via hubs such as the Inter-Blockchain Communication protocol and the Tendermint consensus algorithm to ensure that each blockchain can communicate securely.
Now, some platforms communicate via smart contracts. In this process, tokens are locked on one of the platforms while the token’s corresponding amount is minted on the other platform. An excellent example of this is wrapped tokens.
Instead of transferring Litecoin from the Litecoin blockchain to another platform like XRP, Litecoin is locked in a blockchain that offers the service. Then the corresponding amount such as wrapped Litecoin (wLTC) is issued in pegged tokens on the other blockchain.
In contrast, the Cosmos network consists of open-source tools that enable Cosmos developers to create decentralized and sovereign blockchain apps called Zones (Cosmos smart contracts). This eliminates the reliance on a single chain.
Each of these zones connects to the other via hubs. The Cosmos Hub is the first and primary one but others are available. All zones or hubs don’t have to work with each other but every zone is connected to the Cosmos Hub which keeps tabs on every zone’s state.
All zones can operate autonomously from authenticating transactions and accounts to developing and distributing new tokens and carrying out blockchain changes. Besides facilitating zone interoperability within the network, the Cosmos Hub enables interoperability with Proof of Work blockchains like Ethereum and Bitcoin via bridges even if they don’t satisfy the requirements of the Cosmos protocol.
The Cosmos Hub is powered by ATOM which secures its interchain services. Users can lock their ATOM tokens temporarily to contribute to the Hub’s security using the staking mechanism. In exchange, users receive rewards in a share of the transaction fees collected by the blockchain and newly minted ATOM.
Key Features of Cosmos (ATOM)
These are accounts in the Inter Blockchain Communication protocol-enabled world. Interchain accounts enable blockchains to securely control an account on another blockchain using IBC. Cosmos users can access the entire Interchain through one Cosmos Hub account. This eliminates the need to create an application-level IBC for every module’s features.
Interchain Accounts have certain features: the creation of a new Interchain account over IBC and the relay of transactions to the interchain account and submitting the transaction to the target blockchain.
Interchain Accounts allow one blockchain to access the application features such as swaps, tokens, stakes, and votes of other blockchains. This is similar to how smart contracts interact with each other on the EVM by leveraging IBC.
Interchain Accounts also create a simple and scalable path for early IBC adoption and prevent any form of security risks that may arise.
Chain Name Service (CNS)
CNS is a new Cosmos SDK module that enables Cosmos addresses to get and administer chain names on the Cosmos Network. Chain Name Service makes it easier for users to identify the chains they wish to interact with.
The registration of chain names on the Cosmos Hub by CNS also provides security to Interchain transfer as it makes it easy for every token transfer to and from the Cosmos Hub to be easily tracked.
Liquid Staking which is also known as Staking Derivatives or Programmable Staking enables Cosmos users to tokenize their staking position while also providing the users with additional liquid assets that they can use across other DeFi products and applications.
Liquid Stakings are claims against stored ATOM. Just like in traditional staking, liquid staking accrues rewards but the staking is liquid, this means that they can be transferred.
With liquid staking, users can explore other avenues to earn additional yield without losing the positions of their staked assets. Liquid Staking can be partially burnt if the underlying ATOM is slashed.
The Cosmos Software Development Kit (SDK) is a framework that allows developers to build blockchain applications using the Tendermint consensus algorithm.
Cosmos SDK was built by the Cosmos team and it is written in the Go programming language and was used to build Gaia. Gaia is the implementation of the Cosmos Hub.
Common functionalities available in blockchains such as governance, staking, and tokens are available in the Cosmos SDK. Cosmos developers also have the option of creating more plugins to add extra features to suit their needs.
The Cosmos SDK Tutorials is a tutorial provided by Cosmos team that contains all the vital information needed to learn how to build on top of Cosmos SDK. With the tutorial, Cosmos aims to educate users on how to effortlessly build on Cosmos SDK.
Weaknesses of Cosmos
Just like most cryptocurrencies, ATOM is volatile. Since the value of the token is attached to the network, whatever affects the network can affect the price of ATOM in the crypto world.
How is Cosmos (ATOM) Created?
New ATOM tokens are created as a reward for network validators.
The first ATOM tokens were created at the launch of the Cosmos Mainnet and distributed to the founding donors, the Cosmos Foundation, core developers, and token sale participants.
Mining Cosmos (ATOM)
Which Blockchain does Cosmos (ATOM) Use?
The Cosmos (ATOM) token uses the Cosmos Hub blockchain. ATOM governs and secures the blockchain.
How to Use Cosmos (ATOM)?
ATOM is the native cryptocurrency of the Cosmos network. It is used as a voting mechanism in governance. ATOM holders can govern the Cosmos Hub by using their staked ATOM to vote on proposals. It can also be used to execute smart contracts and complete transactions.
Users can stake ATOM to earn rewards. It can be bonded to earn block rewards. ATOM is also used as a spam prevention mechanism as it is used to pay fees.
The security of the network is guaranteed through the staking of ATOM. The more token holders stake ATOM, the more secure the Cosmos Hub. This is because as more ATOMs are collateralized, the more skin there is at stake and the harder it is for the network to be attacked.
How to Buy Cosmos (ATOM)?
ATOM is available for purchase on popular exchanges like Kraken, Uphold, Binance, Kucoin, and Huobi Global. CoinMarketCap has a list of all the exchanges that support the trading of ATOM.
After picking the right exchange that best suits your need, you can proceed to open an account with the exchange. Once you have verified your new account, you will be able to fund your wallet and purchase ATOM.
How to Store Cosmos (ATOM)?
You can store ATOM in a wallet on the exchange where you bought it or you can move them to another wallet.
ATOM can be stored in both software and hardware wallets. Wallets like Cosmostation, Math Wallet, Keplr, Color Wallet, Guarda Wallet, etc. Hardware wallets like Ledger Nano S and Ledger Nano X also support the storage of ATOM.
Ensure you pick a wallet that is secure to ensure that you do not lose your wallet to hackers.
Best Place to Stake Cosmos (ATOM)?
While there are tons of options, the best place to stake Cosmos is through the Cosmos network. To do so, go to https://cosmos.network/learn/get-atom. Next, buy ATOM by clicking the browse exchange link on the page and choosing any of the top exchanges to purchase ATOM.
After purchase, you need a wallet to start staking. Go to https://cosmos.network/ecosystem/wallets and choose any of the recommended wallets. Cosmostation is a popular option among ATOM holders for staking ATOM. Next, transfer your purchased ATOM from the exchange to the wallet.
In the wallet, you will see the option for staking ATOM, you will also see a list of validators, choose your preferred one and that’s it. There’s an average APR of 9% on most wallets.
What You Need to Know about the Future of Cosmos (ATOM)
Every blockchain project with potential value offers a solution to either real-world issues or blockchain-related challenges. The Cosmos network offers a solution that unites the crypto ecosystem. This puts Cosmos in a great position for the future if more and more crypto users gravitate towards interchain transactions. And since the ATOM token is the native token of the Cosmos Hub blockchain, its price value is pegged on a viable solution. This means that there’s a huge possibility that in years to come the ATOM token will rise exponentially.
Conclusion: Should You Put Your Money in Cosmos (ATOM)?
Cosmos is a great investment opportunity if the crypto industry keeps heading toward the unification of services and applications. But if not, getting quality returns on your investment would be difficult as the ATOM token is directly tied to the Cosmos ecosystem. This means that its value is dependent on the widespread acceptance of the Cosmos network.
Risk in Investing in Cosmos (ATOM)
Cryptocurrencies are volatile assets, which means they can lose their value overnight. This implies that you can lose your entire investment in the worst-case scenario. So only invest in Cosmos (ATOM) what you’re willing to lose.
Most frequent questions and answers
The Cosmos blockchain facilitates blockchains to transfer assets to each other via Peg-Zones and the Inter-Blockchain (IBC) while ensuring that they maintain their sovereignty.
Cosmos does not seek to be “better” than Ethereum; rather its objective is to provide complementary blockchain development frameworks which enable developers to create unique blockchains. However, this is a use case that Ethereum does offer. In general, Cosmos offers a cleaner and smoother structure, cheaper fees and better interoperability.
No, Cosmos is built on the Cosmos Hub, a Proof of Stake blockchain.
The Cosmos (ATOM) asset is the native token of the Cosmos Hub blockchain.
The Cosmos SDK has been used by developers to build several key cryptocurrency and blockchain projects such as Kava, IRISNet, Terra, JUNO, etc.
Yes, one of the standout features of the Cosmos network is its interchain security.
ATOM is the native token of the Cosmos Hub, which is the central blockchain of the Cosmos ecosystem.
ATOM is the main cryptocurrency of the Cosmos network.
You can get ATOM by signing up to a cryptocurrency exchange like Coinbase and Binance, searching for ATOM, and then purchasing it with a fiat currency or another cryptocurrency.
Heterogeneous blockchains are chains that can have one end permissioned and the other end permissionless of the same protocol to enable interoperability and secure data sharing alongside access control.
The Internet of blockchains is a network of blockchains that communicate with each other in a decentralized way.
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