Cosmos (ATOM) and Interoperability Between Parallel Blockchains

What is Cosmos (ATOM)?

Cosmos (ATOM) is an interesting project that calls itself the “Internet of blockchains.” Cosmos aims to build a crypto ecosystem of parallel, independent blockchains that can scale and interoperate with one another. This is already happening with Terra (LUNA), Cronos, and Osmosis, which were built using the Cosmos software development kit (SDK) and connect through the Inter-Blockchain Communication (IBC) protocol.

The Cosmos network uses a proof-of-stake consensus mechanism powered by the ATOM cryptocurrency. Cosmos’s vision is to break down the barriers between blockchains, enabling them to transact with one another and allowing developers to build applications that use tokens from a variety of independent blockchains.

You can buy and trade Cosmos (ATOM) on some of the most popular crypto platforms in the world.

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ATOM Overview

The people behind the ATOM project aim to put their vision into practice through a set of open-source tools, with the Cosmos network consisting of three technologies. The Tendermint protocol, which is responsible for governance; the Cosmos software development kit (SDK), which facilitates application development; and the Inter-Blockchain Communication (IBC) protocol. Cosmos is an open-source community project created by All In Bits Inc.

Tendermint is the name of the Cosmos consensus algorithm, which packages the networking and consensus layers of a blockchain into a single generic engine. This allows developers to focus on developing their applications instead of the underlying blockchain protocol and saves them a great deal of time.

To make application development easier, the development team combines Tendermint with the Cosmos software development kit, a generalized framework that simplifies the process of building blockchain applications. Once developers can quickly build custom blockchains, they can be easily connected through the Inter-Blockchain Communication protocol.

Cosmos can scale and connect in ways that Ethereum has not yet managed to. Over time, a number of other projects have become interested in the Cosmos blockchain and rely on this chain. For example, Terra-Luna, Crypto.com, and Osmosis are currently the hottest projects on Cosmos, but there are hundreds of different applications and blockchains with billions of dollars in total value locked.

Cosmos’s biggest competitor in this space is Polkadot (DOT), which offers hundreds of different parachains.

History of Cosmos (ATOM)

Cosmos was originally conceived by Tendermint creator Jae Kwon in 2014, who was joined by Ethan Buchman a year later. Together, they created the Cosmos software development kit to lower the barrier to entry for blockchain development and build a truly powerful decentralized network. They are also the founders, respectively, and the president and vice president of the Interchain Foundation, a non-profit organization that aims to research, develop, and promote open, decentralized networking technologies that will provide greater sovereignty, security, and sustainability for communities around the world.

The initial coin offering for Cosmos took place on April 6, 2017, raising $17.3 million in Ethereum, Bitcoin, and USD. Approximately 75% of the available token supply was sold during the ICO, with 5% allocated to seed investors and 10% each to All In Bits and the Interchain Foundation. The Cosmos mainnet launched on March 14, 2019, with great success. However, an attack in the summer of 2019 exposed a vulnerability in the network, which was promptly fixed.

Cosmos completed its white paper roadmap on February 18, 2021, with the launch of Inter-Blockchain Communication (IBC) and a full set of additional features.

How do I buy Cosmos?

Most people choose to buy Cosmos (ATOM) from a cryptocurrency exchange. There are many different types of crypto exchanges, with some focusing on trading numerous forms of digital assets, while others operate more like brokerages that simply allow people to buy cryptocurrencies with fiat currency (such as USD or EUR).

Cosmos is available for purchase on a number of platforms, including the following:

• Binance – Use the VAE18EEC coupon for 20% cashback on all trading fees.
• KuCoin – Offers trading in more than 300 highly popular cryptocurrencies. It is often the first exchange to offer buying opportunities for new tokens.
• Gate.io – The largest platform for newly launched cryptocurrencies.

How does Cosmos work?

The Cosmos software development kit facilitates new blockchain applications that can connect to the Cosmos network, but the two main ways the network operates are through the Tendermint and Inter-Blockchain Communication protocols. Together, they form the Cosmos Network.

Tendermint consists of two main technical components: a blockchain consensus engine and a generic application interface. The consensus engine, called Tendermint Core, ensures that the same transactions are recorded on every machine in the same order.

The application interface, called the Application Blockchain Interface (ABCI), allows transactions to be processed in any programming language. Tendermint handles only the networking and consensus portions of the blockchain, meaning that the application layer can define its own rules. This combination of components means developers can quickly build individual, customized blockchains with different applications and their own governance rules and validator sets. These independently operated blockchains are then compatible thanks to the Inter-Blockchain Communication protocol feature.

The Inter-Blockchain Communication protocol allows any blockchain running Tendermint or another blockchain engine with fast finality to transfer value or data to one another.

Ultimately, all kinds of blockchains can be connected through the Cosmos network, creating an ecosystem.

What is IBC?

Based on the Interchain vision, Cosmos developed the Inter-Blockchain Communication Protocol (IBC). This tool does exactly what its name says: it allows different blockchains to communicate with one another.

The launch of IBC was the final part of the development of the three major components of Cosmos technology: Tendermint Core, Cosmos SDK, and IBC.

To better understand IBC, think about how the Internet works. The specific protocol (TCP/IP) allows computers to communicate with centralized servers, thereby creating the Internet.

IBC works in a similar way. However, it connects entire blockchain networks rather than just a few mega-servers. Therefore, it is arguable that the Interchain will be 1,000 times larger than the Internet. To use IBC, you will need an Interchain account (such as a Cosmos crypto wallet).

The best analogy for an interchain account is a letter. The letter is packed into an envelope, which is in turn packed into a box (the IBC module in zone A performs this activity). A delivery truck, also called a relayer, transports the letter from zone A (blockchain 1) to zone B (blockchain 2). The IBC module in zone B opens the box and forwards the envelope to the appropriate destination (the receiving account).

Keplr Wallet: The Interchain Wallet

The Keplr wallet is the first interchain wallet on Cosmos. It is a browser-based wallet, similar to MetaMask for Ethereum or Phantom for Solana, but with support for any IBC chain. It is available on both iOS and Android.

Interchain accounts are held in a wallet, just as Ethereum addresses are held in an Ethereum wallet.

The Keplr wallet supports more than 16 chains, including Cosmos, Osmosis, Juno, Secret Network, Akash Network, Sentinel, Kava, Certik, and IrisNet, among many others. Keplr can be found on the Google Play Store and iOS App Store.

Staking the Cosmos (ATOM) cryptocurrency

Staking is a mechanism for securing networks. In return for securing the Cosmos Hub, users are rewarded with transaction fees and staking rewards.

Staking involves locking crypto assets such as ATOM to provide economic security for public blockchains. Users can earn up to 15% APY on their staked ATOM tokens. In short, if you stake 1,000 ATOM tokens, you earn 150 ATOM each year (12.5 per month). Rewards begin accruing immediately after the staking transaction is confirmed on-chain.

You can even stake various other cryptocurrencies, such as Osmo or Juno, to earn up to 80% APY!

It is worth noting that there is no fixed lock-up period, so users can claim rewards at any time using an IBC-compatible wallet such as Keplr.

Interchain Security

As mentioned earlier, staking secures the network, not just the Cosmos Hub. Network validators (individuals or companies with a certain amount of ATOM tokens locked) can choose to validate any chain in the Interchain using ATOM delegation as collateral.

Cosmos is also a decentralized autonomous organization (DAO), and therefore holding ATOM tokens gives users the opportunity to vote on network governance.

In addition, users are incentivized to secure other chains on the Interchain because they will receive additional rewards. These chains are called child chains or baby blockchains, while Cosmos is the parent blockchain. The more child chains there are, the more rewards there will be.

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