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What Is Cosmos (ATOM)?

Read 6 min
Blockchain on an orange background
— Lack of scalability and interoperability of blockchains has long been a concern for blockchains. 

— Low scalability results in apps and platforms being unable to handle large inflow of user traffic and high cost of usage.

— Lack of interoperability, on the other hand, results in users being segregated across different networks that do not permit the transfer of assets and information across each other.

— Cosmos is a blockchain network and a suite of tools and kits that aims to create an internet of scalable, interoperable blockchains and decentralized applications.

— In this article, we dive into blockchain interoperability, its importance, and how Cosmos is bringing interoperability and scalability to blockchains.

Interoperability is the ability of a digital system — in this case, a blockchain — to interact and communicate data with other similar digital systems despite their slight differences. It is the one thing whose importance most of us didn’t realize until we stepped into the crypto and blockchain space.

Blockchains and blockchain-based applications have had a hard time achieving interoperability. Initially, we only had the Bitcoin network and interoperability wasn’t needed. Then, one good day, Ethereum tagged along and allowed people to build applications on top of a blockchain network. But its scalability and flexibility concerns led to the creation of multiple other blockchains, each having a unique value proposition such as high scalability, gaming and NFT-focused design, low fees, and so on. 

Blockchains like Ethereum attracted wide user bases due to their unique benefits. However, all these blockchains exist like separate islands spread throughout an ocean in some pre-internet era. Communication between them is extremely complicated and scarce.

That’s where the Cosmos network comes in. In its quest to enable communication between networks, it offers a broader scope for blockchains to create a Web3 infrastructure.

The History of Cosmos Blockchain

Cosmos was founded way back in 2014, when most of us didn’t even know blockchains or cryptocurrencies were a thing. Behind this project was Jae Kwon, who laid the groundwork for Cosmos through his years of detailed research; his objective was to build a blockchain that was not as energy-intensive as Bitcoin. 

This research eventually led to the creation of what is today called Cosmos.

Cosmos has a central vision of creating an “internet of blockchains”, and it seems this might not be a dream for long. The CEO of Tendermint – the central developer behind Cosmos – gave an exciting glance into the future, suggesting we’ll be seeing around 200 different chains connected through Cosmos in the futute. But before we get into its future plans, let’s attack the basics.

What Is Cosmos?

In short, this blockchain network with a complete set of tools that serve two primary purposes:

  1. Enabling blockchains to communicate data with each other and create an internet of blockchains
  2. Making it less complex and time-consuming to create scalable and efficient blockchains and decentralized applications (dApps)

Basically, Cosmos allows blockchains to interoperate, while letting them maintain their sovereignty and governance.  For users, that means even though they are using a blockchain within the Cosmos ecosystem, they can individually participate in the governance of that blockchain and use its native token. In short, it keeps its ecosystem independent to Cosmos.

You know, how in a food court, no one has to pick one specific outlet. Instead, you get all your favorite food brands in the same place and you can order from either one or multiple of those in one go. In a way, Cosmos is like that food court but instead of food outlets, it’s offering blockchains.

So how does it achieve this exactly? Let’s find out.

How Does Cosmos Work?

As mentioned earlier, Cosmos isn’t just a blockchain network. It is a complete package of tools that simplifies blockchain development and allows different networks to communicate with each other. Three of the main pillars of Cosmos are Tendermint Core, the Cosmos SDK, and IBC. So how do they work and what are they for?


If you could visualize a blockchain, you’d see it as a sort of “stack” of three different layers, each handling one element of the job: networking, consensus and governance, and application. In basic terms, Tendermint integrates the consensus and networking layer of Cosmos into one, separating out the application layer. This means that a dev can create a new blockchain to integrate with the existing Cosmos ecosystem by using Tendermint Core (the two integrated layers) as a base, and only altering the application layer. 

What is that even supposed to mean?

In simple terms, it means that any developer can build new blockchains on Cosmos without wasting hundreds of hours building everything from scratch. 

Meanwhile, ABCI allows apps to be developed using any programming language to operate within the Cosmos ecosystem. This makes Cosmos a highly flexible network, unlike most other blockchains.

Cosmos SDK

Cosmos SDK (software development kit) is a set of tools that allows you to build Cosmos-compatible decentralized applications without having to write every line of code from scratch. How? Well, if you want to develop apps on Cosmos, the Cosmos SDK offers many open-source modules. To explain, these are pre-written lines of codes that make one or multiple components of an application. All you have to do is plug them into your application.

It’s like getting a prefabricated home. Most of the things you need are already there, but you can add more items to suit your needs. That way, you don’t have to work from scratch and you save a lot of time.

Fine, but when do we talk about the “internet of blockchains” thing? How does Cosmos build that? 

Inter-blockchain Communication Protocol

As the name suggests, IBC is the protocol that sits in the center. Put simply, it allows every blockchain in the Cosmos ecosystem to communicate with each other. IBC is designed to help connect all kinds of blockchains, regardless of their consensus mechanism.

To achieve this, IBC relies on the concept of Hubs and Zones. Zones are all the different blockchains in the Cosmos ecosystem while hubs are specialized middleware blockchains designed to connect Zones.

So, imagine this: you are trying to send some tokens between two blockchains, or Zones. These Zones must be connected by a common Hub for the tokens from one chain to be passed on to the other.

The first Hub of the Cosmos ecosystem is the Cosmos Hub — a proof-of-stake blockchain, powered by its native token ATOM.

Cosmos Token: What is ATOM?

ATOM is the native token of the Cosmos blockchain. Since the blockchain uses a proof-of-stake algorithm, a participant must stake ATOM tokens to secure the network. In this sense, ATOM is the oil that keeps the wheels of Cosmos turning.

Even if you don’t want to become a validator, you may still want to stake your ATOM to secure the network. For users, this means the benefit of earning interest on their staked amount, which incentivizes the security of the Cosmos blockchain.

This is possible via a number of platforms ranging from centralized exchanges to software wallets and decentralized protocols. However, the best way to stake ATOM is through a hardware wallet.

Manage ATOM within the Ledger Live Ecosystem

You can buy Cosmos directly on Ledger Live with ease. Furthermore, Ledger hardware wallets allow you to store your ATOM tokens in the most secure way. Simply, they keep your private keys offline at all times. You can even stake your ATOM tokens directly from within the security of the Ledger Live ecosystem. Using this method you ensure the utmost security of your tokens, while aiding the operation of the Cosmos network. And, of course, you also earn rewards.

Why Blockchain Interoperability Matters

If you’re using multiple blockchains, it’s like living different lives on all of these islands. Going from one to the other and taking your funds together is a whole ordeal as these blockchains cannot communicate with each other. There are third-party apps that offer some level of interoperability but even for experienced users, it’s a painstaking process. For new users, it can be rocket science, and it’s surely not encouraging mass adoption.

The very idea of Web3 is to offer decentralization and freedom from central entities’ grip over the internet. Thus, a framework that enables the interoperability of blockchains is the one thing that can ensure that Web3 exists as one cohesive, decentralized infrastructure.

Knowledge is Power.

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