What Problems Does Cosmos Solve?
The main goal of Cosmos is to solve the problem of lack of interoperability in the market. Collectively, the blockchain sector encompasses a huge number of different services and functionalities. However, each blockchain currently operates as a separate island. This weakens the market’s overall ability to perform important tasks, such as lobbying for more crypto-friendly laws or other vital improvements in the industry.
Thanks to Cosmos, different blockchains can easily coexist, occupying their own specialized niches. This allows developers to focus on improving technology rather than spending it on marketing and other competitive activities. Cosmos even allows blockchains to leverage features from other platforms to enhance their capabilities.
Cosmos brings many benefits to the market. First, the platform is highly customizable. Developers easily can create and release new blockchain applications and platforms. It is important to note that Cosmos (ATOM) is a cryptocurrency that operates without a central authority overseeing the activities of the network. At the same time, the network itself optimizes transactions between blockchains and provides developers with the ability to exchange data and tokens programmatically.
How Does Cosmos Work?
Cosmos uses various proprietary open-source tools to ensure interoperability between blockchains on its network. To accomplish this task, the protocol autonomously monitors the state of each blockchain. In the Cosmos ecosystem, each network is called a zone.
The Cosmos Hub is where all these blockchains come together. The protocol functions as an intermediary. Each zone in the network connects directly to the hub. After that, the hub starts recording the current state of the zone. Once connected to the Cosmos Hub, a zone becomes interoperable with all other zones on the network.
The Cosmos ecosystem uses three layers to connect the entire blockchain industry. The first layer is Application. This is the layer that deals with transaction processing. It also acts as a protocol responsible for keeping records of the state of the network.
Networking is the second layer of the blockchain. This is a layer that allows individual blockchains to interact with each other. Different blockchains with completely different technologies, consensus mechanisms and goals can use each other’s services through this system.
Cosmos Consensus Algorithm
The last layer is the Consensus Protocol. Cosmos uses the Tendermint BFT engine. This mechanism ensures the security of the network and allows the nodes to maintain their current state. In particular, it is the protocol that verifies transactions and adds blocks to the blockchain.
Tendermint BFT engine is a proof-of-stake (PoS) governance mechanism. Network users in it act as validators. Users receive rewards by using their cryptocurrency to stake on the Cosmos network. Staking is a term used to describe the process of blocking a certain amount of cryptocurrency in a network wallet in exchange for a reward. Staking is one of the most popular features in the market today due to its low risk compared to trading.
Inter-Blockchain Communication Protocol
The inter-blockchain communications protocol is a software code that allows various zones within the ecosystem to interact with the Cosmos Hub. This protocol allows all information to move freely and safely between interconnected areas.
The Cosmos software development kit (SDK) allows developers to build blockchains without having to program them from scratch. Developers can use plugins and implement basic functionality of their projects in a matter of days or months. Think of it as something like a website builder. It implements many different features, such as staking, management and token information.
Since the network is a PoS type, users can earn passive income using their cryptocurrency in the staking process. To become the owner of a node on the Cosmos network, you need to be in the top 100 participants in the staking process. This strategy is quite reasonable, because it prevents the nodes from behaving in bad faith, because they will lose the most from any financial blows.
Node owners also can vote. The power of the vote depends on the amount of ATOM tokens that you have wagered. Notably, you also can delegate your tokens to other validators. By delegating your tokens, you will still receive a portion of the block reward.
The history of the Cosmos project begins years before the news of its launch. The platform came about after renowned blockchain developer Jae Kwon introduced Tendermint technology. It was back in 2014, when Kwon teamed up with two other future Cosmos blockchain developers, Zarko Milosevic and Ethan Buchman.
In April 2017, the Cosmos blockchain development team successfully completed an ICO. Surprisingly, it only took the platform 29 minutes to reach its goal. In December 2018, large-scale network testing began with the release of Game of Stakes. Less than four months later, the major version of the Cosmos network was officially launched.
The ATOM token is the internal cryptocurrency of the Cosmos network. It has several very important functions. First, it is used to execute smart contracts and conduct transactions. New ATOM tokens are generated as a reward for validators every time a block of transactions is approved.
Currently, there are 204,603,576 ATOMs in circulation. Notably, most of these tokens were issued at the launch of the Cosmos mainnet. These early tokens were distributed among the early investors, token sale participants, the Cosmos Foundation and the key outsource Cosmos development participants.
The market needs Cosmos. In order to reach the next stage of mass adoption, the cryptocurrency industry must create some unification. Each side will benefit enormously from the unification. By creating a single community, users and developers will thrive.
In addition, this strategy allows blockchain firms to maintain control over the development of the industry. Long gone are the days when cryptocurrencies were considered a form of money used only by criminals. Cryptocurrencies today provide the world with a more efficient alternative to traditional systems.
Cosmos is committed to ensuring that the entire industry can share the achievements of the various projects that comprise it. For these reasons, Cosmos is already one of the most popular cryptocurrencies in the world and has good prospects.