Cosmos (ATOM) blockchain

Gepubliceerd op 17 juli 2022 om 11:36

One project that is getting more and more attention is the crypto project Cosmos (ATOM). Cosmos is seen as the next genesis of blockchains, namely called the blockchain 3.0. One of the problems of blockchain is interoperability. Cosmos is trying to solve this problem, among others.

What is Cosmos (ATOM) precisely?

Cosmos is seen as blockchain 3.0, or the 'internet of blockchains'. The expectations of users and investors are high because Cosmos believes that their blockchain is a lot better than existing blockchains.

Why exactly is Cosmos seen as blockchain 3.0? Cosmos sees the bitcoin blockchain as blockchain 1.0 (the mother of blockchains) and Ethereum the blockchain 2.0. The bitcoin blockchain was the first blockchain. This blockchain can only be used to make transactions, such as payments. The bitcoin blockchain cannot do more than that. Ethereum is seen as blockchain 2.0 because in addition to processing transactions, applications can be built using smart contracts. Smart contracts are software that automatically delivers an output when preset conditions are met. This is completely automatic. The bitcoin blockchain cannot do this.

Cosmos wants to solve a total of 4 problems that current blockchains run into. Think of scalability, usability, sovereignty and interoperability. Scalability and interoperability are probably the two biggest flaws of blockchain.

The problem of scalability of blockchains lies in the throughput of transactions. The blockchain (bitcoin - and Ethereum blockchain) can process few transactions per second in absolute numbers. Credit card companies can process a lot more per second. Because few transactions can be processed but more and more transactions are added, the blockchain becomes congested and transaction costs rise for users. We are already seeing the increase in transaction costs with Ethereum.

These blockchains are very good at what they do. The bitcoin blockchain can handle transactions and payments well. Ethereum can already do more, namely build applications on the Ethereum blockchain through smart contracts.

But what can't they do? They can't work together. The benefits of both blockchains cannot be leveraged. This is the problem of interoperability.

Cosmos also wants to solve the sovereignty problem by putting governance in the hands of the users. Not a group of individuals govern the project, but all users together. This is in line with the idea of decentralization of blockchain. A centralized governance might not fit well here. Some crypto projects (blockchains) received a lot of criticism because they market the blockchain as decentralized, but behind the scenes there was still a small group that determined everything. The bitcoin blockchain also has this criticism because a number of large nodes/miners verify transactions on the blockchain. Smaller nodes/miners do not get involved.

The team of Cosmos

It's good to take a moment to reflect on the Cosmos team. It is important to research and know who the most important people of the project are. The experience of these team members can ensure that a project has a greater chance of success than if a team has no experience. But again, this is not a given. A team with less experience can in itself manage a successful project as well.

Cosmso is a Swiss project called Interchain Foundation (ICF). There are also a number of other projects working on Cosmos, such as Bit Inc and IRIS Foundation. IRIS Foundation is working on an application that operates within the Cosmos network.

How does the Cosmos network work?

Tendermint (BFT) Core consensus algoritme

Cosmos uses the Tendermint Core Consensus (TCC) algorithm. This is an algorithm based on the Proof of Stake (PoS) consensus algorithm. Users can stake their ATOM crypto and receive ATOM on it (like interest). Through the PoS, transactions are also verified on the blockchain. Little electricity needs to be used, unlike the Proof of Work consensus (Bitcoin blockchain). 

A major advantage of the TCC is that it can process many transactions and quickly. With the TCC, far fewer validators (the miners) are needed to verify the transactions. This increases the scalability of the Cosmos network.

Tendermint BFT Engine & Cosmos Software Development Kit (SDK)

As indicated above, one of the problems of blockchain is its usability. Cosmos uses the Tendermint BFT Engine and the Cosmos Software Development Kit (SDk) to address the usability problem. Using the Tendermint BFT Engine, developers outside the Cosmos network can set up their own blockchain without having to program it from the ground up. This also allows hobbyists to set up their own blockchain. Cosmos thus provides a foundation for a blockchain network. This significantly increases the usability of blockchains.

Via the SDK, developers can develop blockchains for certain, specific applications. These applications then run on the Cosmos blockchain. The developer does not have to program a blockchain from scratch.

InterBlockchain Communication (IBC) protocol

This protocol is intended to improve interoperability between blockchains. Many blockchains focus and develop their own ecosystem. This basically means that users can only use the features offered by their own ecosystem. It is then not possible to use the functions of different blockchains. The reason is, is that the blockchains cannot cooperate and communicate with each other. Solutions to this problem have already been devised, such as bridges and sidechains. Through blockchain side chains, the different blockchains can communicate with each other. However, this often involves setting up a completely new blockchain alongside the main blockchain. Blockchain bridges work basically in the same way.

Because each blockchain has its own ecosystem, it is also not possible to share data with other blockchains. To improve interoperability between blockchains, Cosmos came up with the InterBlockchain Communication (IBC) protocol. It should enable communication between blockchains.

Developers can use the protocol to send data between different blockchains. Users and developers then use the Cosmos hub.

You can then imagine that there are then an awful lot of blockchains linked together. Each blockchain running on the Cosmos network is also called a ''zone''. The Cosmos network ensures that all these blockchains run in sync with each other and that all transactions of a zone are recorded on the Cosmos main blockchain. The IBC protocol allows the different blockchains on the Cosmos network to communicate with each other and use the functions of the different zones. As a result, you are not stuck with one blockchain or having to buy different crypto to use the functions of the other network/blockchain.

ATOM cryptocurrency

Cosmos is the project, ATOM is the crypto of the project Cosmos. The ATOM crypto also provides sovereignty. In fact, users who hold ATOM can vote for validators who should work within the network and can verify transactions. ATOM users can choose validators based on performance. If a validator does not perform well, the holders of ATOM can vote those validators out of the network.

Applications on the Cosmos network

A few examples of applications running on the Cosmos blockchain.

  • Mirror
  • Band protocol

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