|Original author||Jae Kwon; Ethan Buchnan|
|Date released||14 March 2019|
|Supply limit||268 335 653|
The interoperable, scalable blockchain network. ‘Built for developers’, is one of several slogans for Cosmos, a cryptocurrency project some herald ‘blockchain 3.0’ or ‘the internet of blockchains.’ Cosmos has a unique goal, unlike other digital currencies, of solving the interoperability problem in the industry where blockchains cannot liaise with one another.
Their solution is therefore making them highly scalable, customizable, and simpler to develop. This entire ecosystem of data-sharing and programming works in a decentralized manner. Since its debut in March 2019, Cosmos has risen over 26,000% in close to two years, now currently valued at around $23.54.
It is presently the 19th-most traded digital currency with an enormous market cap of roughly $4.8 billion (all stats correct as of 22 February). This article attempts to cover in comprehensive yet straightforward terms the complexity of Cosmos, how it works, its technical components, and what makes it a special endeavor.
The birth of Cosmos dates as far back as 2014 through the formation of Tendermint (the company name is now All In Bits), a US-based blockchain company. American-based computer scientists Jae Kwon and Ethan Buchman are the co-founders of Tendermint, the technology acting as the entire platform’s backbone.
Swiss-based non-profit, The Interchain Foundation (ICF), now oversees Cosmos’ development and is the same organization that helped develop and launch the project. Kwon and Buchman act as the president and vice president, respectively.
After the founders authored the whitepaper, three sales, two of which were private, occurred in January and April 2017, respectively. The reported figure generated from this initial coin offering was roughly $17.3 million, where one ATOM was worth $0.10.
Regarding token distribution, around 75% of the ATOM supply went to investors, 5% withheld for seed investors, and 10% to the ICF. The Mainnet launch of Cosmos officially occurred on the 14th of March 2019.
How does Cosmos work?
Cosmos is a network of independent blockchains known as ‘zones.’, which any developer can build or join. These zones then tether into the Cosmos Hub. There are two primary components of this platform, the Tendermint Core and the Inter-Blockchain Communication (IBC) protocol.
Tendermint Core is the open-source layer developers use to create or integrate their blockchains. The IBC facilitates the seamless communication between the Cosmos Hub and ‘zones,’ allowing for the efficient digital asset, token, and data exchange.
ATOM is the native cryptocurrency of Cosmos that ‘fuels’ all the activity (such as executing smart contracts) and transactions. There is a specific total finite supply of 268,335,653 (TOM (with about 210.5 million presently in circulation) where users can earn these tokens via ‘staking’ as a validating node or delegator.
ATOM also acts as a governance token where holders can vote on proposals. Aside from the network itself, ATOM is available at numerous cryptocurrency exchanges for trading purposes.
Cosmos is a highly secure proof-of-staking blockchain where nodes confirm transactions by ‘staking’ or ‘freezing’ their tokens. The higher the stake, the higher the rewards are. Staking is necessary for transaction confirmation and earning a passive income of between 7 to 20% per year in ATOM coins.
Users can partake as validators or delegators in the staking process. Validators are the nodes or computers hosting a copy of the blockchain on their side to validate blocks or transactions, hence earning the bulk of the transaction cost in the form of new ATOM coins. Validators make 98% of the fees, with the rest going to a designated reserved pool.
After that, delegators, who are non-active or passive in the procedure, receive the ATOM based on different commission rates (reported to be between 1% and 25% of the rewards) from the validators. What sets Cosmos’ staking apart from other PoS coins is there is no minimum amount to stake whether one is a validator or delegator.
What makes Cosmos valuable?
As with other cryptocurrencies such as NEM, Cosmos seeks to achieve ‘blockchain interoperability,’ a concept referring to making unrelated blockchains communicate with each other seamlessly. Presently, there is a stark contrast against this idea where each blockchain is unique and is not compatible with others.
By achieving this goal, various blockchains can leverage the functions of plenty of other platforms. Linked to compatibility, Cosmos seeks to improve the usability of blockchains by making them less complex and more customizable to operate for developers.
Furthermore, this project is very much focused on scalability as a blockchain utilizing proof-of-stake, which is faster, far ‘greener,’ and less power-consuming than its proof-of-work counterparts. Scalability also centers around the ability for complex distributed ledgers to form in Cosmos’ ecosystem in about a week, where it would originally take weeks on so-called second-generation blockchains.
Furthermore, there is no minimum amount to stake for investors. Typically, many cryptocurrencies require thousands of their coins to be involved in staking, which itself is already a heavy financial commitment.
For any blockchain enthusiasts or those with a keen interest in this field, Cosmos is one venture that’s worth studying in furthering its grand vision of becoming the ‘internet of blockchains.’ While how the system works is a little complex for laypeople, anyone should understand the immense value and potential growth of this cryptocurrency project.