What is Cosmos?

The Cosmos blockchain was created to make it easy for different blockchains to talk to each other, without needing a central authority to oversee them. Its creators wanted to create a system of open-source blockchains that could work together and make transactions faster and simpler.

Making different computer systems communicate with each other has always been a difficult task, including with blockchain technology. This communication is called interoperability. Just like you can send emails from your Gmail account to someone using Hotmail, or share data between an Android phone and an iPhone, blockchains also need to be able to communicate with each other in order to be useful.

Cosmos is a platform that allows different blockchains, such as Binance Chain, Terra, and Crypto.org, to work together for the first time, with over $151 billion of digital assets currently being managed. The cryptocurrency that powers the Cosmos platform is called ATOM, and it helps to secure and maintain the network of interconnected blockchains that are designed to be scalable and work together seamlessly.

Quick Facts

• Cosmos is a blockchain ecosystem designed for interoperability between different blockchain networks.

• It was founded in 2016 and launched its mainnet in March 2019.

• The native cryptocurrency of Cosmos is called ATOM.

How does Cosmos work?

Cosmos is a network of interconnected apps and services that use hubs, consensus algorithms, and protocols to ensure secure communication between different blockchains. Interoperability is important for blockchains to communicate with each other, just like how Gmail can send emails to Hotmail.

Cosmos offers open-source tools that allow developers to build decentralized and sovereign blockchain applications called zones. The Cosmos SDK is a software development kit that simplifies the process of building zones by offering common functionality among blockchains such as staking, governance, and tokens.

Each zone connects to another zone through hubs. The Cosmos Hub is the main hub, and it keeps a record of each zone's state. Each zone can function autonomously and can create and distribute new tokens and execute blockchain changes.

Cosmos uses the Tendermint Byzantine fault tolerance (BFT) engine consensus protocol to secure the network. The higher the amount of ATOM staked, the higher the voting power for the validators. Users can also delegate their tokens to validators and interchange them.

Cosmos blockchains communicate through the Inter-Blockchain Communication (IBC) protocol, which allows the transmission of secure messages between different blockchains. The Cosmos Hub is regarded as a service provider to the chains that must connect to it to become interoperable. Any cross-chain application can be built thanks to the IBC.

What is ATOM used for?

In the Cosmos ecosystem, the ATOM cryptocurrency is important because it helps secure the network through a process called staking. To become a validator, crypto investors need to stake the same amount of ATOM coins as the current top 150 Cosmos validators. But those who don't want to run their own validator node, can delegate their tokens to a staking pool to earn a percentage of crypto rewards.

ATOM is also used to pay for network fees and for on-chain governance. This means that ATOM holders have a say in the future of the network by using their coins to vote on upcoming proposals. Each ATOM coin equals one vote on the protocol.

Ethereum vs Cosmos

Ethereum has been planning to switch from Proof of Work (PoW) to Proof of Stake (PoS) consensus algorithm for a while, but it hasn't happened yet. This means that Ethereum is less sustainable than Cosmos, which uses Tendermint BFT PoS algorithms that can handle thousands of transactions per second. Ethereum transactions can take minutes or even hours, while Cosmos transactions are much faster and cheaper.

In Ethereum, complex financial instruments are handled with permissionless smart contracts, but in Cosmos, each smart contract or application is a blockchain itself, ensuring smooth transactions without interference.

Cosmos offers a developer-friendly environment to build sovereign blockchains quickly and cheaply. It allows simple communication between blockchains, which Ethereum does not, unless the complicated and insecure exchange of wrapped tokens is used.

However, Ethereum is still the most popular blockchain platform, especially for DeFi, NFTs, and the Metaverse. Ethereum's network effect makes it the go-to platform for these trendy blockchain features, both now and likely in the future.

Cosmos vs Polkadot

Cosmos and Polkadot are both blockchain platforms that have similar governance models. However, there are two main differences between them.

Firstly, in Cosmos, the top 100 validators who stake the highest amount of ATOM validate transactions. Delegators can choose and change validators’ pools to earn rewards. Zones can have their preferred type of governance, and private permissioned blockchain zones can be created alongside public ones, allowing for easy asset transfers between them.

On the other hand, in Polkadot, parachains are similar to Cosmos’ blockchain zones, but they share the same set of validators to ensure a unified and strengthened security across the network. Token transfers between parachains are executed via smart contracts, while Cosmos uses IBC to provide easy asset transfers and interaction between chains via IBC and the Cosmos Hub.

Additionally, Cosmos smart contracts are essentially blockchains, allowing for each transaction to be recorded in three different places: the two interacting zones and the hub.

Who founded Cosmos?

Cosmos is a blockchain project that was created by software developers Jae Kwon and Ethan Buchman in 2014. They also created Tendermint, which is the system that powers Cosmos. The project was funded by the Swiss Interchain Foundation (ICF), which supports blockchain projects, and the Tendermint team.

To get started, the Interchain Foundation held a fundraising event called an initial coin offering (ICO) in 2017, where they sold a token called ATOM and raised over $17 million. In 2019, Tendermint Inc. raised $9 million to continue developing the project.

Some big names in the crypto world, like Paradigm and Bain Capital have invested in Cosmos. Jae Kwon left the project in 2020 but is still involved, while Ethan Buchman is still the president of the Interchain Foundation Council.

How to buy ATOM?

Sign up for an exchange.

To create an account, provide a valid email address, choose a username, and set a strong password. There are a ton of exchanges you can select from such as Binance, Upbit, Coinbase, OKX or Kucoin. Find the whole list of exchanges here.

Verify your account.

Enter your personal information, including your name, date of birth, country of residence, and phone number. If you want to use cash to buy ATOM, you'll need to provide additional identity verification documents.

Deposit cash.

You can fund your exchange account using a variety of methods, depending on your location and preferences.

Purchase ATOM!

Once your account is funded, you're ready to buy ATOM. Most exchanges offer advanced charting tools, 24-hour global client support, and margin and futures trading for experienced traders.

Can you stake ATOM?

Staking ATOM is an important step to help secure and manage the Cosmos ecosystem. It's a simple process of choosing one or more validators to start earning rewards in the form of crypto assets. Staking also gives you the right to vote on important decisions that will shape the future of the network.

Currently, staking ATOM can earn you an annual reward of around 9.7% of the total amount staked. For example, if you stake 1000 ATOM, you can earn around 89 ATOM as reward and around 10% in commission, although the exact amount varies depending on the validator you choose.

Staking rewards come from transaction fees generated by the Cosmos Hub and are distributed to ATOM holders. To minimize risks, it's recommended to stake with multiple validators at the same time. In the rare event that a validator misbehaves or has downtime, your staked ATOM could be forfeited (burned) and lost forever.

To claim your staking rewards, you simply need to generate a transaction with no value or cost using a wallet. There isn't a specific Cosmos wallet, but many exchanges and crypto services support networks and tokens across the Cosmos ecosystem.

Popular options include Exodus, Math wallet, Citadel One, Ledger Live, Shapeshift, and Trust wallet.

Final Thoughts on Cosmos

The future looks bright for the Cosmos network! They have some exciting plans in the works to make things even better.

One of the big improvements they're working on is called Interchain Security. This will make the whole network even more secure and protect all the different chains that are connected to it.

They're also working on making it easier to move things like digital art and money between different blockchains. This will make it possible for people to do more things with their crypto and make transactions faster and smoother.

Cosmos has a talented team of developers working hard to make all these improvements happen. So, there's a lot to look forward to in the future of Cosmos!

ATOM is the primary token used in the Cosmos ecosystem, and it has seen a significant increase in value since its creation

ATOM is crucial to maintaining interoperability across the Cosmos network and can be held, spent, sent, or staked. With more zones being built on the network, ATOM becomes even more valuable, especially as adoption increases.

One important thing to note is that there is no cap on the number of ATOM tokens that can be created. Instead, Cosmos adjusts the number of tokens based on the amount being staked.

Investing in ATOM is easy, as it can be traded on major platforms like Coinbase, Binance, and Kraken. Users can also stake their ATOM to gain rewards and vote on network upgrades.