The Cosmos blockchain is heralded by its creators as the “Internet of blockchains”. The main goal of the protocol is to create a network of blockchains united by an open-source hub that streamlines transactions between them.
Sounds confused?
Worry not because today we will be looking at the Cosmos blockchain and its functionality in much more detail. This article will discuss what the Cosmos network is, how it works, what purpose the ATOM token serves, and whether it is a legitimate crypto project.
So, let’s get started.
What is Cosmos?
Cosmos was established as a portal to facilitate communication between different blockchains without them having to rely on a single centralized server. Its founders wanted to create an interoperable platform of open-source blockchains that could facilitate transactions with each other.
Rather than prioritizing its own blockchain, the Cosmos team’s goal is to foster an ecosystem of blockchain networks that can share data and tokens without having to rely on any central entity.
Cosmos is the world’s first fully free blockchain ecosystem to enable interoperability between different decentralized networks, including Binance Chain (BNB), Polkadot (DOT), and Crypto.org (CRPTO), to name a few. The protocol has over $151 million worth of digital assets under management.
How Does Cosmos Work?
The Cosmos blockchain is an ever-expanding ecosystem of apps and services that are interconnected. Each time a new independent blockchain is created within Cosmos, it is tethered to the Cosmos Hub, which acts as the central hub that maintains a record of the state of each blockchain (zone).
The network makes use of the Tendermint consensus algorithm, and the Inter-Blockchain Communication (IBC) protocol to ensure each zone can communicate with each other in a streamlined and secure manner.
The zones communicate with each other using smart contracts. This way, Cosmos allows for tokens to be locked in one blockchain and their corresponding amount to be minted on another blockchain. Wrapped tokens use a similar mechanism to perform transactions between two different blockchains.
For example, rather than sending BTC from the Bitcoin network to Ethereum, the Bitcoin gets locked in a functional blockchain that provides the service. The corresponding amount of tokens is issued in wrapped Bitcoin (wBTC) on another blockchain.
Developers can build decentralized and sovereign blockchain-based applications on Cosmos called “zones” instead of relying on a single chain. The Zones act as smart contracts on the network.
Zones minimize the complexity of achieving interoperability among blockchains by offering most of the functionality of distributed networks such as staking, governance, and tokens through various software development kits (SDKs).
Beyond facilitating interoperability between all the zones within the Cosmos ecosystem, the Cosmos Hub also allows Proof-of-Work blockchains like Bitcoin to interact with Proof-of-Stake blockchains like Ethereum through token bridges.
What is the ATOM Token?
ATOM is the native cryptocurrency of the Cosmos blockchain. The token plays a key role in maintaining interoperability between all zones in the Cosmos ecosystem. Moreover, ATOM can be used to pay for transactions, sending and receiving funds, or staking.
Holding and staking ATOM gives users the ability to vote on network upgrades. Each vote is proportionate to the amount of ATOM they staked. Cosmos also rewards network validators with ATOM based on how many tokens they have staked, with delegators receiving a small percentage of the reward.
ATOM Tokenomics
At the time of writing, ATOM is trading at $10.02 – down 10% in the last 24 hours. The blockchain has had a 24-hour trading volume of $524.2 million.
The total market capitalization of the Cosmos network is $3.82 billion. ATOM has an infinite supply. However, the current total circulating supply of ATOM stands at 381.49 million tokens. The fully diluted valuation of the ATOMs in supply is the same as its market cap.
Is Cosmos Real or Fake?
Cosmos, considered to be the “Internet of Blockchains”, is an open-source network that facilitates interoperability among different chains. The protocol enables developers to create “Zones” based on different blockchain networks and deploy them on the Cosmos Hub, allowing the chain to interact with other Zones on the hub.
Cosmos allows developers to build sovereign apps that can function on other blockchains without relying on smart contracts, thereby avoiding having to pay high transaction fees and developing better scaling features. With sovereign networks being able to seamlessly communicate with each other by splitting apps to perform on multiple blockchains, Cosmos achieves high scalability.
Interconnecting all these aspects is the ATOM token, which is both the utility and governance token of the Cosmos ecosystem.
All things considered, I can say that Cosmos is a legitimate cryptocurrency project that aims to solve the issues of scalability, interoperability, and sovereignty faced by various other blockchains.
The promising project still has a long way to go but offers developers the unique opportunity to build applications on one blockchain and perform services on another blockchain, all the while operating via a single network.
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Conclusion
You must always note that cryptocurrencies are highly volatile and dynamic assets. Therefore it is crucial to study a cryptocurrency project thoroughly before making any investment decision.
Remember to be responsible with your crypto investments and never put in money that you can’t afford to lose.
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