What is Cosmos Crypto?
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Cosmos is a protocol that supports something called “blockchain interoperability,” which makes it possible for different blockchains to communicate with each other. Cosmos aims to link up many crypto networks with open-source tools that allow for cross-chain transactions.
Unlike many other types of cryptocurrency, Cosmos and the Cosmos cryptocurrency (ATOM) exist to serve other networks to create a scalable, decentralized blockchain web.
What Is ATOM Coin?
The ATOM cryptocurrency powers the Cosmos Hub proof-of-stake blockchain. This token is the Cosmos coin and an important part of blockchain interoperability on the Cosmos network. Users can earn ATOM tokens via a hybrid proof-of-stake algorithm and help to secure the Cosmos Hub. The ATOM cryptocurrency also plays a role in governance for the network.
Cosmos compares its ATOM tokens to the ASIC machines used to mine Bitcoin. A technical paper written by the Tendermint team once described the ATOM crypto as a piece of virtualized hardware that people need to obtain to be able to participate in the Cosmos network.
History of Cosmos (ATOM) Crypto.
The history of Cosmos goes back to 2014 when developers Ethan Buchman and Jae Kwon created Tendermint, the consensus algorithm that serves as the backbone to the Cosmos network. In 2016, Buchman and Kwon published the Cosmos whitepaper. That same year, the first token sale for ATOM occurred.
A Swiss non-profit organization called The Interchain Foundation (ICF) helped launch and develop Cosmos, which founders have referred to as “the internet of blockchains.” In 2017, the organization hosted an initial coin offering (ICO) for the ATOM token, raising more than $17 million. Tendermint Inc. raised $9 million in 2019 to continue developing the project.
How Does the Cosmos Network Work?
A proof-of-stake consensus algorithm secures the Cosmos network. Validator nodes stake a certain amount of ATOM tokens, with those staking the most having the highest odds of being chosen to verify transactions and earn rewards. Dishonest nodes get penalized and lose the tokens they staked.
Cosmos works to create a collaborative ecosystem of different blockchains that can share data and tokens in a decentralized way, independent of any third-party. New blockchains can be tethered to the Cosmos Hub, where they can communicate with other blockchains that are also connected to the Hub.
The Cosmos network has three layers, tied together by a set of open-source tools that allow developers to build blockchain applications.
- The application layer works to process transactions and update the state of the network.
- The networking layer allows for communication across blockchains.
- In the consensus layer, nodes agree on the current state of the system.
The application layer works to process transactions and update the state of the network. The networking layer allows for communication across blockchains. And the consensus layer is where nodes agree on the current state of the ATOM DeFi system.
Tendermint
The most fundamental part of the Cosmos network is Tendermint, which gives developers the ability to easily build blockchains. Tendermint Byzantine Fault Tolerance (BFT) is an algorithm used by computers that run the Cosmos software to commit blocks to the blockchain, validate transactions, and secure the network.
A key part of Tendermint is Tendermint Core, a proof-of-stake governance mechanism that keeps all the computers that run the Cosmos Hub in sync. As mentioned in the section on Cosmos crypto, validator nodes have to stake ATOM to power the blockchain. Being a validator requires a node to be in the top 100 nodes that are currently staking ATOM. Nodes receive voting power in proportion to the amount of ATOM staked.
Cosmos Hub
The first blockchain to launch on the Cosmos Network was the Cosmos Hub. The hub functions as a gateway through which all the different blockchains created within the network could function. The different blockchains are referred to as “zones.”
Within Cosmos, each zone can perform independent functions. That means everything from authenticating transactions and accounts to creating and distributing new tokens and more. The Cosmos Hub lets all the blockchains work together by keeping track of their states.
What Can You Use ATOM for?
Developers need ATOM to be able to participate in the network and vote on proposed changes. Traders can trade crypto like ATOM to speculate on the price, trying to buy low and sell at a higher price later. Investors can also stake their ATOM crypto to earn rewards. Staking rewards are like “crypto dividends” in that users can be regularly rewarded with more cryptocurrency in proportion to the value of the crypto they stake.
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