Cosmos Crypto (ATOM): What It Is, History, and Mechanism

Cosmos Crypto (ATOM), with its native digital currency ATOM, stands as a decentralized network comprised of parallel and independent blockchains. In essence, Cosmos represents an ecosystem of interconnected blockchains designed for scalability and seamless collaboration. Prior to the advent of Cosmos, blockchains existed in isolation, unable to communicate without reliance on third-party tools. However, through the innovative use of new technologies, the Cosmos platform has ushered in the era of the Blockchain Internet, fostering communication between diverse blockchains.

Addressing the longstanding challenges of compatibility and mutual interaction among blockchains, Cosmos has emerged as a prominent solution in the realm of interactive blockchain networks. Fueled by the Tendermint consensus mechanism and supported by open-source development tools, Cosmos offers a compelling option for those seeking an interconnected blockchain experience. At the core of this network is its digital currency, Atom (ATOM), which plays a crucial role in facilitating transactions within the Cosmos ecosystem.

This article delves into the history of Cosmos, conducts a future analysis of ATOM’s price trends, and guides readers on the intricacies of buying and selling the Atom cryptocurrency on various exchanges.

Creators of the Cosmos Blockchain Project and Atom Cryptocurrency:

The origins of Cosmos Crypto (ATOM) can be traced back to the year 2014 when Jae Kwon introduced the revolutionary Tendermint mechanism. Subsequently, in 2016, the Cosmos project’s white paper was collaboratively published by Jae Kwon alongside two other developers, Zarko Milosevic and Ethan Buchman. The official launch of the ATOM cryptocurrency came in 2017, marked by a remarkably successful initial public offering on a cryptocurrency exchange, completed in just 29 minutes. The momentum continued with the 2018 launch of the Game of Stakes network, swiftly followed by the official mainnet launch in less than four months.

While Jae Kwon is acknowledged as one of the primary architects of Cosmos, he resigned from the CEO position in 2020. His successor, Mr. Peng Zhong, has since taken the reins, overseeing fundamental changes in the board of directors as the Cosmos project evolves.

History of the Cosmos Crypto (ATOM) Project:

April 2017: In the first 29 minutes of the Cosmos ICO, $17 million worth of tokens were sold.

December 2018: The Game of Stakes (GoS) program was launched, rigorously testing the Cosmos network.

March 2019: The Cosmos Main Network was officially launched.

November 2019: Kava Labs became one of the first projects to use the Cosmos Software Development Kit (SDK) for their mainnet launch.

February 2020: The Cosmos development team underwent significant changes, and founder Jae Kwon departed from the project.

September 2020: Cosmos partnered with Nym to integrate anonymous credentials into its ecosystem.

February 2021: The Cosmos ecosystem witnessed the Stargate update, featuring the first public release of the Inter-Blockchain Communication (IBC) protocol.

Position of Cosmos and Atom Digital Currency (ATOM) in the Blockchain Landscape:

To understand Cosmos Crypto (ATOM) significance, we need to contextualize it within the broader blockchain landscape. Blockchain, akin to key innovations like the Internet, has evolved through several generations, with Cosmos representing the third generation.

Blockchain is a decentralized digital ledger maintained by validators in a proof-of-stake model. It remains secure even if up to a third of validators act maliciously. Participants retain copies of the ledger, updating them with each transaction block, ensuring all members view an identical copy of the ledger at any time.

Blockchain’s primary advantage lies in decentralization, eliminating the need for a central authority. Bitcoin, as a decentralized currency, is the pioneering application of blockchain technology.

Understanding Cosmos Crypto (ATOM) functionality and Atom’s advantages requires grasping the technical aspects of blockchain. Blockchain operates as a finite state machine replicated on Full Nodes, maintaining consensus health with fewer than one-third of validators acting maliciously.

From an architectural standpoint, blockchain comprises three layers:

1. Application: Processes transactions, updating the state.
2. Networking: Duplicates transactions and consensus messages.
3. Consensus: Facilitates agreement among nodes on the system’s current state.

The state machine, at the application layer, defines the application’s state and state transition functions. Other layers replicate the state machine across network nodes.

Cosmos Crypto (ATOM) Vision : Third-Generation Blockchain

The vision driving Cosmos is ambitious yet revolutionary: to streamline the creation of blockchains and break down barriers between them, fostering interoperability. At its core, Cosmos aspires to construct the “internet of blockchains” — an interconnected network where blockchains communicate in a decentralized manner. Through the Cosmos network, individual blockchains can maintain autonomy, process transactions swiftly, and engage in seamless communication with other blockchains within the ecosystem, thereby significantly enhancing overall efficiency.

The realization of these lofty goals and vision is made possible by a suite of open-source tools. Key among them are Tendermint, the Cosmos Software Development Kit (SDK), and the Inter-Blockchain Communication (IBC) protocol. These tools collectively empower the rapid development of personalized, secure, scalable, and interoperable blockchain applications. Understanding these tools and features is crucial for gaining insights into the Cosmos platform and comprehending the future trajectory of the ATOM cryptocurrency.

It’s worth noting that Cosmos Crypto (ATOM) is not just a vision but a tangible, open-source project initiated by the Tendermint team. This implies that the richness and potency of this blockchain platform are not confined to a select few; anyone can contribute to its enhancement by building new tools. This emphasis on openness and collaborative development underscores the dynamic and inclusive nature of the Cosmos ecosystem, paving the way for continual innovation and growth.

How Cosmos Crypto (ATOM) Work:

To comprehend the functionality of the Cosmos network and the Atom digital currency, it’s essential to grasp their purpose. Cosmos positions itself as a solution to the most challenging problems in the blockchain industry, offering an ecosystem of interconnected blockchains as an alternative to the “slow, expensive, non-scalable, and environmentally harmful” proof-of-work protocols utilized by networks like Bitcoin.

Core Objectives:

1. Addressing Blockchain Challenges: Cosmos seeks to tackle industry challenges by providing an antidote to the limitations of proof-of-work protocols, offering an ecosystem that is interconnected and efficient.
2. Developer-Friendly: Another goal is to simplify blockchain technology for developers through a modular framework, demystifying decentralized applications. Key features include an inter-blockchain communication protocol that facilitates seamless interaction between blockchain networks, preventing industry fragmentation.

Cosmos Ecosystem Structure: The Cosmos project functions as an ecosystem comprising networks and tools designed for building interactive blockchains. At its core is the Cosmos Hub, the main chain serving as a central ledger for compatible blockchains known as Zones. These Zones are highly customizable, allowing developers to design their cryptocurrencies, set block validation parameters, and implement other features.

Key Components:

1. Cosmos SDK: This toolkit provides the fundamental tools for developing blockchains within the Cosmos network. It streamlines the process and includes the default consensus layer, Tendermint Core, offering a core validation consensus mechanism applicable across all Cosmos blockchains.
2. Zones: These are individual blockchains built using the Cosmos SDK. Each Zone has the autonomy to determine its validators and customize various aspects.
3. Consensus Mechanism: The Cosmos Hub mainnet selects 100 validators from a pool of top Atom cryptocurrency staking nodes. Validators receive voting power based on the number of ATOM tokens staked. The consensus mechanism involves selecting a block leader, with successful blocks rewarding both the validator and the Atom token stackers who voted for them.
4. ATOM Token Utility: Apart from the consensus mechanism, the Atom currency is crucial for paying transaction fees and participating in network governance. Validators are required to engage in proposals, and failure to do so may result in fines.

Cosmos Blockchain Layers:

1. Networking Layer: In this layer, transactions are validated, and consensus messages are processed to facilitate communication with other blockchains.
2. Application Layer: Updates to the network status based on new transactions and balances occur in this layer.
3. Consensus Layer: Organizes nodes on how to agree on adding new transactions to the blockchain.

Tool Integration: These three layers are seamlessly combined through a set of tools and open-source programs. For instance, Tendermint integrates the networking and consensus layers into a ready-to-use engine. By using Tendermint, blockchain developers can focus solely on the application layer, saving time and resources. This modular approach enhances the efficiency and accessibility of the Cosmos blockchain.

Cosmos Hub: Cosmos Crypto (ATOM)

At the heart of the Cosmos network lies the Cosmos Hub, functioning as the primary blockchain that interlinks various personalized blockchains referred to as “zones.” This intricate connectivity is achieved through the vigilant monitoring and tracking of each zone’s status using the Inter-Blockchain Communication Protocol (IBC). The IBCP acts as the conduit through which information seamlessly travels between the zones tethered to Cosmos Hub.

The Cosmos Hub assumes the pivotal role of a central ledger within an ecosystem comprising IBC messaging zones. Facilitating this communication are two types of transactions under the IBC framework: IBCBlockCommitTx and IBCPacketTx. The former transaction type conveys the last block hash of each zone, while the latter empowers zones to validate the legitimacy and accuracy of information packet releases from the sending application. The Atom currency plays a vital role in facilitating these intricate interactions.

Consider two decentralized applications operating in distinct zones that wish to communicate. In this scenario, IBC messages documenting this interaction are dispatched to Cosmos Hub. Subsequently, these messages traverse the Cosmos Hub, and each respective zone records the outcomes of their interactions on their individual blockchains. This results in a tangible record of activity across three separate blockchains. This inherent capability of blockchains to seamlessly interact with one another has earned the Cosmos network the moniker “The Internet of Blockchains.”

In essence, the Cosmos Hub serves as the nexus, orchestrating the harmonious exchange of information between diverse blockchains, embodying the vision of a truly interconnected and interoperable network. This capability not only enhances the efficiency of individual blockchains but also solidifies Cosmos’ standing as a trailblazer in the realm of blockchain technology.

Inter-Blockchain Communication Protocol (IBC):

To gain a deeper understanding of the Inter-Blockchain Communication (IBC) protocol, let’s break down its components. Consider a scenario where an account on blockchain A intends to send 10 tokens, such as ATOM digital currency, to blockchain B. The transfer process involves several key steps:

1. Tracking:
   • Blockchain B and A continuously exchange headers. This ongoing communication enables each blockchain to stay updated on the validation set of the other. Essentially, each blockchain runs a light client of the other.
2. Bonding:
   • At the initiation of the IBC transfer, ATOM digital currencies are locked on blockchain A, a process referred to as bonding.
3. Sending Proof (Proof Relay):
   • A proof document confirming the locking of 10 Atom tokens is transmitted from Blockchain A to Blockchain B.
4. Validation:
   • Blockchain B checks the proof document against the header of Blockchain A. If the proof is valid, Blockchain B generates a receipt for 10 ATOM digital currencies. It’s important to note that the ATOM tokens created on Blockchain B are representative and not actual tokens, as they solely exist on Blockchain A. The receipt on Blockchain B serves as evidence of the frozen tokens.

This intricate process illustrates how the IBC protocol ensures secure and validated communication between distinct blockchains, facilitating the seamless transfer of assets.

Cosmos Zone:

Within the Cosmos Crypto (ATOM) network, custom blockchains are aptly termed “Zones,” presenting a versatile array of applications. This nomenclature serves as an alternative to the commonly encountered term “Sidechain,” as seen in projects like Polygon. Each Zone holds the capability to evaluate its own transactions, mint tokens, and implement unique developments. Despite these individual characteristics, Zones maintain the ability to interact seamlessly with other zones within the Cosmos ecosystem, provided they adhere to licensing protocols.

Zones within Cosmos utilize a Hub & Spoke architecture, with hubs serving as routers for different zones. While the Cosmos Hub stands out as one of the most prominent hubs, there are others contributing to the network’s diversity. Given the entirely public nature of this network, the creation of a blockchain hub or zone is open to anyone. However, it’s essential to note that hubs or zones reserve the right to accept or reject connections from other blockchains, ensuring a dynamic and controlled network environment.

Tendermint Mechanism:

Traditionally, blockchain developers faced the challenge of constructing all three layers—networking, consensus, and application—from scratch. While Ethereum revolutionized decentralized applications through smart contracts, building the blockchain itself remained a complex task. Tendermint, conceptualized by the founder of Cosmos, addresses this issue as a multifaceted protocol.

Tendermint’s Dual Role:

1. Blockchain Consensus Mechanism (Tendermint Core):
   • Tendermint Core serves as the blockchain’s consensus mechanism, offering a Byzantine Fault Tolerant (BFT) system. This ensures the verification of new transactions even in the presence of malicious actors.
2. Tool for Application Connection (Tendermint ABCI):
   • Tendermint ABCI acts as a tool that allows applications to interface with Tendermint Core consensus engines, providing a streamlined approach for applications to connect seamlessly with the consensus layer.

Blind Tendermint in Cosmos:

• Blind Tendermint is the default consensus protocol of the Cosmos network, leveraging the advantages of a Byzantine Fault Tolerant (BFT) system. In simple terms, BFT ensures the verification of transactions even in the presence of malicious participants.

Validator Dynamics:

• Validators within the Cosmos Hub run nodes, each holding a copy of the blockchain data. However, not every node becomes a validator, and the Cosmos Hub restricts the number of validators to 100. Validators, who authenticate transactions, vote on whether new blocks should be added to the chain. Validators secure their position in the network by staking ATOM digital currency. The top 100 staked nodes become validators with corresponding voting power. Users can also stake ATOM tokens on behalf of validators and receive a portion of the block reward.

Significance of Tendermint: Cosmos Crypto (ATOM)

1. Adaptability for Public and Private Blockchains:
   • Tendermint, focusing on networking and consensus layers, allows customization at the application layer. Developers can tailor each zone to determine validator selection and specify whether the blockchain is public or private.
2. High Performance:
   • Tendermint boasts a block time of approximately 1 second and can process thousands of transactions per second, ensuring high-performance capabilities.
3. Instant Finality of Transactions:
   • A key feature of the Tendermint consensus algorithm is instant finality. As long as the majority of network validators behave honestly, transactions are confirmed as soon as a block is created. This stands in contrast to proof-of-work blockchains like Ethereum and Bitcoin, providing users with quicker and more secure transaction confirmations.
4. Enhanced Security:
   • Tendermint simplifies the identification of blockchain forks and separate transaction histories in the event of network divergence.

In summary, Tendermint’s significance lies in its adaptability, high performance, instant transaction finality, and robust security features. These attributes make it a preferred choice for building efficient and secure public and private blockchains within the Cosmos ecosystem.

What is ATOM Digital Currency:

ATOM, the native token of the Cosmos network, plays a central role with three key functions:

1. Transaction Fee Payment:
   • Users are required to use ATOM to pay transaction fees, and the amount is proportionate to the computing power required for the transaction. This feature ensures that ATOM serves as the fuel for transactions within the Cosmos ecosystem.
2. Participation in Governance:
   • ATOM is integral to the Cosmos Hub governance system. Holding ATOM tokens grants users voting power in proportion to the quantity of tokens they possess. This democratic governance structure allows token holders to influence decisions and contribute to the platform’s evolution.
3. Staking for Consensus Participation:
   • ATOM tokens can be staked by selecting a validator, contributing to the consensus algorithm, and, in turn, participants are rewarded. This staking mechanism not only secures the network but also incentivizes users to actively participate in the consensus process.

ATOM’s distribution occurred through an Initial Coin Offering (ICO), and unlike some cryptocurrencies, it follows an inflationary model. The Blind Tendermint model allows for the creation of new Atom Tokens as rewards for stakers. The inflation rate is dynamic, adjusting based on the quantity of staked cryptocurrency and the number of participants in the network. This approach ensures a sustainable and incentivized ecosystem, promoting active participation and engagement within the Cosmos network.

Inter-Blockchain Communication in the Cosmos Ecosystem:

At the core of the Cosmos project lies its transformative feature: the ability to connect disparate blockchains, marking a unique facet of the Cosmos network and the Atom cryptocurrency. This seamless communication between blockchains is facilitated through the Inter-Blockchain Communication Protocol (IBC), enhancing the instant finality characteristic of the Tendermint consensus. This protocol enables heterogeneous blockchains to transfer value (tokens) or data across each other, offering a level of interoperability that sets the Cosmos ecosystem apart.

Key Components of Heterogeneous Blockchains:

1. Different Layers:
   • Heterogeneous chains exhibit diversity in their layers, encompassing varied implementations of networking, consensus, and application components. IBC compatibility requirements are minimal but crucial, with a focus on the consensus layer’s need for fast finality. Traditional proof-of-work chains, like Bitcoin or Ethereum, do not fit this criterion due to their probabilistic finality.
2. Independence:
   • Each blockchain is governed by a set of validators tasked with reaching consensus on the next block. This independence is crucial, as validators hold responsibility for state modifications. The sovereignty of blockchains ensures diverse applications and limited autonomy within each program.

IBC Protocol: Fostering Interoperability:

• The IBC protocol acts as the linchpin, enabling heterogeneous blockchains to seamlessly transfer tokens and data between each other. This interoperability extends beyond mere compatibility, allowing blockchains to interconnect with varying applications and validator sets. Public and private blockchains, for instance, can fluidly exchange tokens, marking a level of interoperability unparalleled in current blockchain frameworks.

Connecting Blockchains Beyond Tendermint:

• Cosmos goes beyond the limitations of Tendermint-based blockchains, extending its connectivity to any type of blockchain. These blockchains can be categorized into two types:

1. Fast Finality Blockchains:
   • Blockchains leveraging any fast finality consensus algorithm can effortlessly connect to Cosmos through the IBC protocol.
2. Probabilistic Finality Blockchains:
   • For blockchains lacking fast finality, a specialized proxy chain known as Peg-Zone comes into play. Peg-Zone functions as a blockchain proxy, tracking the state of another blockchain. With its inherent fast finality, Peg-Zone becomes IBC-compatible, effectively bridging the gap for blockchains without fast finality. The primary task of this proxy chain is to establish finality for the connected blockchain.

In summary, the Cosmos ecosystem’s groundbreaking feature lies in its ability to connect blockchains seamlessly, fostering interoperability and enabling diverse blockchain architectures to communicate effectively, regardless of their consensus mechanisms. This level of connectivity is a testament to the innovative and inclusive design principles of the Cosmos project.

Addressing Scalability Challenges in the Cosmos Project:

Even with the ability to build and interconnect blockchains, the challenge of scalability persists. The Cosmos network tackles scalability issues through a two-fold strategy:

Horizontal Scalability:

This method involves optimizing the blockchain itself. By transitioning away from proof-of-work and fine-tuning its components, the Tendermint Byzantine Fault Tolerant (BFT) engine within the Cosmos network achieves scalability that can support thousands of transactions per second. However, the application layer becomes the limiting factor in this type of scalability. Applications like virtual machines (e.g., Ethereum virtual machine) impose lower transaction capacity limits compared to those with a broader range of transactions and embedded state transfer functions (e.g., standard Cosmos SDK applications). Specialized blockchains for specific applications make sense under this approach.

Vertical Scalability:

Even with a fully optimized consensus engine and application, a single blockchain’s transaction efficiency will eventually face limitations, representing the vertical scalability limit. To overcome this constraint, the Cosmos network adopts a multi-blockchain structure. Multiple blockchains run the same application in parallel and are governed by a shared set of validators, offering the potential for theoretically infinite scalability. Achieving vertical scaling involves intricate details but is a crucial aspect of the Cosmos design. Notably, the Cosmos network provides impressive vertical scalability from its launch, with plans to implement horizontal scaling solutions after the completion of the IBC module.

Decentralized Applications (dApp) Built on Cosmos:

As a blockchain network emphasizing interoperability and high scalability, Cosmos Crypto (ATOM) has become a favored platform for decentralized application (dApp) developers. Noteworthy dApps within the Cosmos ecosystem include:

1. Anchor:
   • A financial platform providing low-volatility interest rates for stablecoin deposits.
2. Flares:
   • A payment network supporting various assets and payment systems, catering to applications in video games and decentralized finance (DeFi).
3. Klever:
   • A comprehensive mobile app encompassing a wallet, browser, and portfolio, offering users a versatile and user-friendly experience.

These examples underscore the appeal of the Cosmos network for developers seeking to build high-performance cross-blockchain decentralized applications. With its focus on scalability, interoperability, and support for smart contracts, Cosmos provides a robust foundation for innovative dApp development within the blockchain space.