Cosmos is already a very popular crypto project. We see this not only in the exchange rate of the ATOM currency, but also in the fact that more and more people are talking about this project. However, Cosmos is not a project that is easy to understand. Technically, it is very difficult to understand how Cosmos works.
Nevertheless, today we are going to attempt to explain how Cosmos works technically. We will first give you some general information about Cosmos, after which we dive deeper into how this project works.
- 1 What is Cosmos?
- 2 Competition from Cosmos
- 3 Team behind Cosmos
- 4 Cosmos usage situation
- 5 The three layers of Cosmos
- 6 What is Tendermint BFT and ABCI? How does it work?
- 7 What is Ethermint and how does it work?
- 8 What are Heterogeneous Blockchains?
- 9 Hub & Spoke Cosmos Architecture
- 10 Scalability Resolution
- 11 How can you buy Cosmos (ATOM)?
- 12 Where can I store ATOM tokens?
- 13 The price of Cosmos (ATOM)
- 14 The board of Cosmos
- 15 Conclusion
What is Cosmos?
Cosmos is a digital currency and blockchain network focused on solving some of the industry’s most challenging blockchain and crypto problems. Cosmos is a decentralized network that aims to increase interoperability, scalability and independence in the blockchain market.
Currently, many major cryptocurrencies, including Bitcoin (BTC) and Litecoin (LTC), use Proof of Work (PoW) consensus algorithm .
These PoW blockchains work with a decentralized network of miners that require large amounts of energy to confirm transactions and secure the network. As the official Cosmos website explains, PoW protocols are slow, expensive and undecipherable. Bitcoin can process 7 transactions per second while many other consensus algorithms are much more efficient than PoW.
To solve these problems, Cosmos uses a fault-tolerant Byzantine consensus machine called Tendermint BFT. This Proof of Set consensus algorithm (PoS) aims to become much more scalable and efficient.
Another important issue that Cosmos wants to address is Blockchain applications. These applications are complex and difficult to understand, even for blockchain developers. That’s why Cosmos has been working on a solution called the Cosmos SDK, which is a modular framework that allows interested developers to create interoperable, application-specific blockchains.
In addition, blockchain networks in the current market are generally not interoperable. To solve this problem and increase interoperability in the cryptocurrency space, Cosmos has developed the IBC protocol through a blockchain messaging protocol called IBC (Interblockchain Communication).
Competition from Cosmos
There are several other blockchain networks in the market that are also working towards interoperability in the cryptocurrency space. Some of these networks are Cardano (ADA), AION (AION) or ICON (ICX).
Blockchain networks are very difficult to link together. Each of them has its own characteristics that cannot be exploited by many other users of other digital resources. Cosmos and Cardano are just two of the largest cryptocurrencies and have a distinct advantage over the other participants mentioned above.
Cardano is known as a third generation digital currency being developed by Charles Hoskinson and other developers. Hoskinson is also the co-founder of Ethereum , the second largest digital cryptocurrency in the world.
Cosmos is expected to improve its network, continue its development and differentiate itself from Cardano, ICON and AION with unique features and improvements to its blockchain.
Team behind Cosmos
Cosmos is currently supported by the Interchain Foundation, also known as ICF. Jaw Kwon, Ethan Buchman and Guido Schmitz-Krummacher are on the board. Ash Han, Franck Mikulecz, Jim Yang, Thomas Greco and Zaki Manian are the network’s advisors.
Tendermint consists of:
- Jae Kwon , CEO and Founder
- Ethan Buchman , CTO and Co-Founder
- Peng Zhong , head of design
- Adrian Brink, lead developer en community manager
- Christine Chiang , Head of Communications
- Greg Szabo, vice-president SRE
- Jessy Irwin , Head of Security
- Many others.
Kwon has also worked on other initiatives such as the team productivity app called “I did this”. He has also worked on other projects such as Scramble.io, Flywheel networks and also Yelp.
Ethan Buchman, CTO and co-founder of the network, has been working as a researcher for 2 years. He started working in the cryptocurrencies market in 2014 with Eris Industries.
Cosmos usage situation
Cosmos enthusiasts and investors want to know about the different use cases related to blockchain networks before investing in them. One of the first things to consider is that Cosmos can be used as a network to run a decentralized crypto exchange .
Decentralized exchanges (DEX) currently use atomic transactions between blockchains. There are other DEXs that allow transactions to take place on their own blockchain. Users can create a limit order and turn off the computer.
Binance DEX is one such decentralized exchange. It allows users to trade digital assets without using a centralized platform. In general, these DEX exchanges cannot compete with centralized exchanges with deep order books, high liquidity and improved interfaces.
The Cosmos DEX is said to have many advantages over other decentralized platforms and would provide traders with a much better trading experience similar to that of centralized platforms.
Another important use case is the ability to link different cryptocurrencies together. Different platforms can have complementary functions, but it is not possible to use both without building a bridge. The Cosmos network creates a bridge area that would facilitate the connection of the networks.
In addition, Cosmos can solve the scaling problem that Ethereum is currently experiencing. The Ethereum network is trying to move to a Proof of Take (PoT) consensus algorithm to improve its performance.
With the implementation of Tendermint on the Cosmos platform, it is possible to commit blocks faster than the Ethereum network. This means that the Cosmos network has a better-performing blockchain than Ethereum.
The three layers of Cosmos
Cosmos’ vision is to make it easy for developers to create blockchains and break down the barriers between blockchains by making them work together. The ultimate goal is to create an internet of blockchains, a network of blockchains that can communicate with each other in a decentralized way.
Cosmos allows blockchains to remain sovereign, process transactions quickly and communicate with other blockchains in the ecosystem, making it optimal for a wide variety of use cases.
This vision is achieved through a set of open source tools such as Mint, the Cosmos SDK and IBC designed to enable users to quickly create customised, secure, scalable and interoperable blockchain applications. Let’s take a closer look at some of the key tools in the ecosystem and technical architecture of the Cosmos network.
Cosmos is an open source community project originally built by the Tendermint team. Everyone is invited to create additional tools to enrich the larger developer ecosystem.
From an architectural point of view, blockchains can be divided into three conceptual layers:
- Application : Responsible for updating the status of a series of transactions, ie processing transactions.
- Consensus : Allows nodes to agree on the current state of the system.
- Networking : Responsible for the dissemination of transactions and consensus-related messages.
What is Tendermint BFT and ABCI? How does it work?
Until recently, building a blockchain required building all three layers (networking, consensus, and application) from scratch. Ethereum simplified the development of decentralized applications by providing a virtual machine blockchain on which anyone can implement custom logic in the form of smart contracts .
However, the development of the blockchains themselves has not become easier. Like Bitcoin, Go-Ethereum remains a technology that is difficult to use and adapt. That’s where Tendermint, created by Jae Kwon in 2014, comes in.
Schedule for Tendermint BFT
Tendermint BFT is a solution that bundles the network and consensus layers of a blockchain into a generic engine, allowing developers to focus on application development rather than the complex underlying protocol. This saves Tendermint hundreds of hours of development time.
Note that Tendermint is also the name of the Byzantine Fault Tolerant (BFT) consensus algorithm used in the Tendermint BFT engine.
The Tendermint BFT engine is connected to the application through a socket protocol called Application Blockchain Interface (ABCI). This protocol can be packaged in any programming language, allowing developers to choose a language that suits their needs.
But that is not everything. Here are the features that make Tendermint BFT a state-of-the-art blockchain engine:
Ready for public or private blockchain
Tendermint BFT only provides networking and consensus for a blockchain, meaning it helps nodes propagate transactions and allow validators to agree on a set of transactions to add to the blockchain. It is the role of the application layer to determine how the validation set is formed.
Developers can thus create public and private blockchains alongside the Tendermint BFT engine. If the application determines that the validators are chosen based on the number of tokens they have in play, then the blockchain can be seen as Proof of Stake (PoS).
However, if the application determines that only a limited set of pre-authorized entities can act as validators, then the blockchain can be seen as authorized or private. Developers have the freedom to adjust the rules that govern how their blockchain’s validation set changes.
Tendermint BFT can have a blockchain time of about 1 second and process up to thousands of transactions per second.
A property of the Tendermint consensus algorithm is instant finiteness. This means that forks are never created until more than a third of the validators are honest (Byzantine). Users can rest assured that their transactions are completed once a block is created (which is not the case with Proof-of-Work blockchains such as Bitcoin).
The Tendermint consensus is not only protected from error, but it is also accountable. If the blockchain distorts, there is a way to determine liability.
Cosmos SDK and other application layer frameworks
Tendermint BFT cuts blockchain development time from years to weeks, but creating a secure ABCI application from scratch remains a difficult task. This is why the Cosmos SDK exists.
The Cosmos SDK is a generalized framework that simplifies the process of creating secure blockchain applications on top of Tendermint BFT. It is based on two important principles:
The goal of the Cosmos SDK is to create an ecosystem of modules that allows developers to easily launch application-specific blockchains without having to code every bit of functionality in their application from scratch. Anyone can create a module for the Cosmos SDK, and using out-of-the-box modules in your blockchain is as simple as importing them into your application.
For example, the Tendermint team is creating a set of core modules needed for the Cosmos Hub. These modules can be used by any developer when creating their own application. In addition, developers can create new modules to customize their application.
As the Cosmos network grows, the ecosystem of SDK modules will expand, making it increasingly easy to develop complex blockchain applications.
Capabilities limit security boundaries between modules, allowing developers to better reason about module compatibility and limit the scope for malicious or unexpected interactions.
The Cosmos SDK also comes with a set of useful development tools for creating command line interfaces (CLIs), REST servers, and a variety of other commonly used utility libraries.
What is Ethermint and how does it work?
The advantage of the Cosmos SDK is that its modularity allows developers to port virtually any existing blockchain codebase to Golang. For example, Ethermint is a project that has ported the Ethereum virtual machine into an SDK module.
Ethermint works exactly like Ethereum, but also benefits from all the features of Tendermint BFT. All existing Ethereum tools (Truffle, Metamask, etc. ) are compatible with Ethermint and you can transfer your smart contracts without extra work.
Now developers may be wondering: why create a blockchain with the Cosmos SDK when I can easily deploy my decentralized application on top of an EVM?
This question is justified, as most dApps today are developed on top of virtual machine blockchains such as Ethereum. First of all, it must be said that the reason for this phenomenon is that until now blockchains have been much more difficult to develop than smart contracts. This is no longer the case, thanks to the Cosmos SDK.
Now developers can easily develop application-specific blockchains, which have several advantages. They offer more flexibility, security, performance and sovereignty, among other things. Of course, if you don’t want to create your own blockchain, you can always make your smart contracts compatible with Cosmos by implementing them on Ethermint.
Connecting Blockchains – IBC
Now that developers have a way to quickly create custom blockchains, let’s take a look at how we can connect these blockchains together. The connection between blockchains is established through a protocol called the Inter Blockchain Communication (IBC) protocol.
IBC uses the instant finality property of the Tendermint consensus (although it can work with any “fast finality” blockchain engine) to enable heterogeneous blockchains to transfer value (tokens) or data between them.
What are Heterogeneous Blockchains?
Essentially it comes down to two things:
Heterogeneous blockchains have different layers, which means that they can differ in the way they implement the network, the consensus and the application components.
To be compatible with IBC, a blockchain must meet only a few requirements, the most important of which is that the consensus layer must have a fast endpoint. Proof of Work blockchains (such as Bitcoin and Ethereum) do not fall into this category, as they serve a probabilistic purpose.
Each blockchain is maintained by a group of validators whose job is to agree on the next block to be committed to the blockchain. In PoW blockchains, these validators are called miners.
A sovereign blockchain is a blockchain with its own set of validators. In many cases it is important for blockchains to be sovereign as the validators are ultimately responsible for changing the state. In Ethereum, all applications are executed by a common set of validators. For this reason, each application has only limited sovereignty.
IBC enables heterogeneous blockchains to transfer tokens and data among themselves, meaning blockchains with different applications and validator sets are interoperable. For example, public and private blockchains can transfer tokens to each other. Currently, there is no other blockchain framework that allows this level of interoperability.
Hub & Spoke Cosmos Architecture
IBC is a protocol that enables two heterogeneous blockchains to transfer tokens to each other. How do you create a network of blockchains from there?
One idea is to connect each blockchain in the network to another via direct IBC connections. The main problem with this approach is that the number of connections in the network grows with the number of blockchains. If there are 100 blockchains in the network and each blockchain must maintain an IBC connection with each other, then that would be 4950 connections. This quickly gets out of hand, as you can probably imagine.
To solve this problem, Cosmos proposes a modular architecture with two classes of blockchain: Hubs and Zones. Zones are ordinary heterogeneous blockchains and hubs are blockchains specially designed to connect zones together. When a zone establishes an IBC connection to a hub, it automatically accesses (ie transmits and receives from) all other zones connected to it. Therefore, each zone only needs to establish a limited number of connections to a limited set of hubs.
Hubs also avoid double spending between zones. This means that when a zone receives a token from a hub, it only needs to trust the zone from which the token comes and the hub.
The first hub launched in the Cosmos network is the Cosmos Hub. The Cosmos Hub is a public Proof-of-Stake blockchain whose native staking token is called ATOM, and where the transaction fee will be paid in multiple tokens. The launch of the Hub also marks the start of the Cosmos network.
Now that we can easily create and connect blockchains, there is one last problem that needs to be solved: scalability. Cosmos uses two types of sc
This includes methods for scaling the blockchain itself. By moving away from proof of work and optimizing its components, Tendermint BFT can achieve thousands of trades per second.
The bottleneck is the application itself. For example, an application such as a virtual machine (e.g. Ethereum’s virtual machine) will impose a much lower limit on transaction throughput than an application that directly integrates transaction types and state transition functions (e.g. a standard Cosmos SDK application). This is one of the reasons why application-specific bl
ockchains make sense.
Even if the consensus engine and application are highly optimized, at some point the transaction speed of a single blockchain will inevitably reach a limit it cannot exceed. This is the limit of vertical scaling. To go beyond this, the solution is to move to multi-chain architectures.
The idea is to have several parallel blockchains running the same application and managed by a common set of validators, which theoretically makes blockchains infinitely scalable. The details of horizontal scalability are quite complex and beyond the scope of this introduction.
Cosmos will offer very good vertical scalability at launch, which will be a major improvement over current blockchain solutions in their own right. Later, after the completion of the IBC module, horizontal scalability solutions will be implemented.
How can you buy Cosmos (ATOM)?
Cosmos Hub is a blockchain network that has its own digital asset called ATOM. The main function of the virtual currency ATOM is to allow users to vote, validate or delegate decisions to other validators. ATOMs can be used to pay transaction fees and also to reduce spam on the network. In addition, you can of course also see it as an investment.
You should always be told to only invest money you don’t need. Of course, this also applies to Cosmos (ATOM). When you decide to buy ATOM tokens, you can do so through various crypto exchanges. We recommend that you do it through a major exchange like Binanace, ByBit or Bitvavo. These exchanges can be trusted, so it will not go wrong.
In addition, you also pay the best price for PHA tokens here, because these exchanges offer high liquidity. That means there is a lot of supply and demand for these tokens on these platforms, allowing for the best price possible.
Of course you can also use a decentralized exchange (DEX) such as Uniswap or Sushsiswap. However, it is a lot more difficult to buy crypto coins on a DEX. That is why we also recommend using a centralized crypto exchange.
Where can I store ATOM tokens?
We are lucky that ATOM is a popular token. This allows you to store ATOM in almost any wallet; both software and hardware wallets. Many people will choose to store their ATOM tokens in a software wallet linked to the crypto exchange they purchased Cosmos from.
If you have a lot of ATOM in your possession, it is recommended to store it in a hardware wallet . This way you ensure that hackers cannot access this if the wallet is not linked to a device with internet. You can also store the ATOM in a software wallet, as long as you keep it secure.
The price of Cosmos (ATOM)
At the time of writing (October 2021) ATOM is valued at $36. However, the price fluctuates continuously, so it is smart to keep a close eye on the price. The best way to do that is on CoinMarketcap’s website:
22,84 EUR (0,00%)
€6,54 B EUR
€366,22 M EUR
The board of Cosmos
Many blockchain networks in the market have a wide variety of governance systems that allow the network to behave in one direction or the other. In this case, the validators are responsible for the entire Cosmos ecosystem.
For these validations to work, they will need to deploy ATOM tokens or a combination of other digital assets. The validators are also encouraged to participate in the market by voting for the various proposals in a timely manner. If they don’t, they are punished, which means that they cannot function for a certain period of time.
The network has developed five different moods, including “Yes”, “Yes-with-Strength”, “No”, “No-with-Strength” and “Abstinence”.
A specific proposal is passed by majority vote (a combination of “yes” and “yes-with-force”). If “No” or “No-by-force” wins the majority, the proposal is rejected. At the same time, more than one voter can veto a “strong” majority decision. Anyone who vetoed it will be punished with one day minus the stake. Those who vetoed the majority decision will lose 0.1% of their ATOM.
Cosmos (ATOM) is a blockchain network that aims to solve many of the problems currently facing the cryptocurrency market. Scalability is one of them. With so many networks looking for fast transaction solutions, Cosmos is already ahead of the market.
In recent times, this project has been able to establish itself among other major crypto projects. Therefore, more and more people are choosing to buy ATOM tokens as they believe it is a good investment.
With a group of developers working on true interoperability with other blockchains and a scalable solution with a clear governance system, Cosmos and ATOM could become one of the largest cryptos in the world in the coming years.
Thanh Lanh Tran(1989) is Chief Editor from BitcoinUSD.com