What is Cosmos (ATOM)?

Imagine not being able to send an email from a gmail account to a hotmail account. Would the internet as we know it today exist? This lack of interoperability is still a common problem in cryptocurrency, where different projects are often built in a way that makes it difficult for them to work with one another. 

Cosmos is a decentralised ecosystem for crypto projects that aims to enable them to easily and securely transact with one another and share data and tokens.

Cosmos, and other projects that aim to solve the same issue, are compared to being like ‘the internet for blockchains’. In Cosmos, each project can operate on its own while interacting with other projects in the ecosystem. Cosmos says there are currently more than 249 interchain apps and services in the Cosmos network.

The underlying principle behind creating a system of interoperable and independent crypto projects is to create apps that won’t have to compete with limited capacity on just one blockchain. 

What does Cosmos do?

The name Cosmos comes from the idea of creating an interconnected and harmonious universe of blockchains. 

Cosmos allows different blockchains to work together, meaning a project that uses one of the blockchains in Cosmos to build on can easily move cryptocurrencies and other data between different blockchains, just as if they were all part of the same system. 

Cosmos apps and services connect using a technology called the Inter-Blockchain Communication (IBC) protocol. IBC serves a similar role inside Cosmos as the Internet Protocol (IP) does for transferring data between computers around the world on the internet. This is also why Cosmos is sometimes referred to as the internet of blockchains. 

Here’s how interoperability in Cosmos would come into play

Data integration

Let’s say the project on Blockchain A is a prediction market. They might need real-time data from Blockchain B to ensure the accuracy of predictions, such as sports scores, election results or stock prices.

If the prediction market is built on Blockchain A, inside Cosmos, an application can connect with another project built on Blockchain B, still inside Cosmos, allowing data from both blockchains to be easily accessed. 

Asset transfer

Still using the prediction market example, if the prediction market uses a specific cryptocurrency, it can be seamlessly transferred to other blockchains. This would allow users to place bets using their preferred cryptocurrency housed on another blockchain.

Security and trust

The Cosmos ecosystem aims to ensure that the data and other digital assets transferred between various blockchains are secure. This maintains trust and reliability for users participating in the prediction market.

What is Cosmos’ cryptocurrency?

The native cryptocurrency of the Cosmos is called ATOM. The cryptocurrency powers its governance, security, and economic systems. Cosmos incentivises active participation, secures the network, and allows users to interact with and contribute to the broader Cosmos ecosystem. 

Cosmos is available to buy and sell on the Luno app and website. 

How does Cosmos reach consensus?

The Cosmos Hub uses a variant of proof-of-stake (POS) to reach consensus, called Bonded proof-of-stake (BPOS). Validating transactions can be delegated to other validators, also known as stakers, who must “bond” funds as a form of down payment to ensure everyone acts in the best interest of the network. 

This is similar to POS, but with BPOS, the amount of cryptocurrency bonded can influence the level of participation or voting power a participant has in the network, making it more like a weighted POS system.

The main difference is the “bonding” aspect, which emphasises the commitment of participants in BPOS. 

While the Hub reaches consensus using POS, the network of blockchains relies on a mechanism known as Tendermint, which provides the foundational layer of security and agreement for Cosmos blockchains.

How does Cosmos work?

Cosmos Hub

The Hub is the primary blockchain of the Cosmos ecosystem to which each of the other blockchains are connected. The Cosmos Hub keeps a record of the state of each blockchain in the ecosystem. 

Tendermint

Tendermint is a crucial component of the Cosmos ecosystem, serving as the consensus mechanism that underpins the entire network. It provides the foundational layer of security and agreement for Cosmos blockchains. In the Cosmos ecosystem, different blockchains, called zones, can be built independently, but Tendermint ensures they can communicate and reach consensus efficiently and securely.

Zones

Each independent blockchain in the ecosystem is called a zone.

Validators

Validators are responsible for checking and validating transactions. Validators are chosen through a voting process.

IBC 

This is the communication system that connects the zones, the blockchains in the ecosystem to the Cosmos Hub, the intermediary blockchain that allows communication between other blockchains in Cosmos. It’s like the internet for the Cosmos network, allowing different zones to talk to each other.

This is the communication system that connects the zones, the blockchains in the ecosystem to the Cosmos Hub, the intermediary blockchain that allows communication between other blockchains in Cosmos. It’s like the internet for the Cosmos network, allowing different zones to talk to each other.

Useful tools 

Cosmos blog 
Cosmos white paper 
Cosmos on X 

*Investing in cryptocurrency may result in the loss of capital as the value can fluctuate.