Cosmos (ATOM): The Solution to Cryptocurrency Interoperability Problem

Key points

  • Cosmos: The Project
  • Cosmos: The Working
  • Cosmos: The Need

Cosmos: The Project

Cosmos with it native token ATOM is a cryptocurrency project that was developed in order to solve the problem of interoperability among various blockchains. The project was launched in 2016 as the number of blockchains being developed in the cryptocurrency space at that time was gaining pace. The Cosmos has an SDK that has been a launch pad for various projects including Terra (LUNA) and BNB. The interoperability among the blockchains is extremely essential as there are thousands of blockchains in the crypto space and Cosmos aims to make them interoperable in order to enhance their usefulness.

Cosmos: The Working

Cosmos has been called as “internet of blockchains” by its developers because it aims to build a crypto network that is linked together via open-source technologies. The feature of interoperability among blockchains differentiates Cosmos from other projects. Interoperability will allow all the networks to transfer data and tokens among them easily, without any need for a central entity to enable the activities. 

Tendermint, a unique Proof of Stake consensus mechanism was created by Jae Kwon, creator of Cosmos for the development of blockchains. It is considered as most secure and scalable blockchain in the crypto industry. It is estimated to process 10,000 transactions per second and its functioning will not be affected even if one-third of validator nodes are unavailable or are attempting to corrupt the network.

Instead of developing bridges between blockchains, Bitcoin and Ethereum, Ethereum and Polkadot, and Bitcoin and Polkadot, all the three chains are linked to a single Cosmos hub. In the Cosmos network, there are many hubs and Cosmos blockchain is one such hub. 

For the governing of the entire Cosmos network, ATOM cryptocurrency is used. To interconnect all of the blockchain industry, the Cosmos ecosystem is developed on three layers. The initial layer is the application layer, which is responsible for updating the state of transactions and also monitors the condition of the network. The second layer is networking, which allows communication between different blockchains. The third layer is the consensus layer, which acts as a medium for nodes to agree over the current state of the system. 

Cosmos: The Need

The issue of interoperability is one of the major issues from the beginning of the cryptocurrency era. As the blockchains work in a silo to achieve high level security, they are unable to communicate with each other. One solution over the year has been applied to create a bridge between two blockchains to communicate, but this requires creation of bridges for every cryptocurrency pair that needs to communicate. Cosmos on the other hand provides a decentralized hub to which multiple blockchains can connect to and communicate with each other without worrying about developing bridges and converting tokens every time a transaction is made. The Cosmos project has the ability to transform the blockchain space.

Disclaimer: The article is just to provide information and shouldn’t be considered as any financial advice. It is advisable to conduct thorough research before investing in any cryptocurrency.

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