Hey everyone, I’m Kris with Exodus. If I asked you a question about being a developer
to set out and solve the problems of scalability, usability, and sovereignty inherent in many
blockchains, you might end up with something that looks a lot like Cosmos.
Aptly named because of the mental image we
get when thinking of our galaxy and how the various elements exist individually but are
bound and interact together by a universal force, this, of course, is gravity.
Now, I know you’re not here for a science
lesson, so let’s move on and take a more in-depth look at the Cosmos network and the
ATOM cryptocurrency.
In a nutshell, Cosmos Network is a decentralized ecosystem of independent
blockchains that can scale and connect to one another. This includes not only blockchains
that are built on Cosmos, but also external blockchains such as Bitcoin and Ethereum through
what’s called a peg zone. More on that in just a few minutes but first let’s put a
name to this process. Cosmos has already done some of the hard work for us here and has
named this an “Internet of Blockchains” or “IoB” for short.
Let’s hear how Cosmos inventor “Jay Kwon” explains this...“Each individual blockchain
maintains control of its own governance, but is interoperable with other blockchains in
the network. Blockchains that do not utilize BFT algorithms can be connected to the Cosmos
network via “adaptor” blockchains. Cosmos was not designed for one particular use case,
but to be adaptable to suit many different use cases.”
Pretty simple stuff, right? Well once we get all the fancy acronyms down we can start to
get the technology out of the way and understand what cosmos does and how it works on a basic
level. The Cosmos network is a dual-layer blockchain ecosystem with native token Cosmos
“ATOM” to power its transactions. The first layer packages the networking and consensus
layers of a blockchain into a generic engine, This allows developers to focus on the application
development instead of the protocol which makes the network run.
Ethereum was the first to simplify the application development through smart contracts, but as
Dapps, not independent blockchains.
This first layer is called Tendermint BFT.BFG No, not the big friendly Giant.
BFT stands for Byzantine Fault-Tolerance and is the consensus mechanism of the Cosmos network,
which as I said before, includes the networking functions which are responsible for transmitting
transactions and consensus-related messages.
The second layer is the application layer, where the Cosmos SDK is used for individuals
to create their own blockchains. The Cosmos SDK will translate many different popular
programming languages such as, Java, C++, and others for example.
At the time of recording, ATOM is worth about 4 dollars with a market cap of around 757
million dollars. And about 100 million of that moves around the markets every day.
ATOM is a Proof of Stake coin, which means that you can delegate your tokens into a validator
pool and earn rewards on your holdings. The more ATOM you stake, the more you earn. Staking,
however, locks up your ATOM and, if you want to unstake them, the cooling-off period is
21 days.
Cosmos ATOM is sitting at #23 in the overall crypto market cap and is listed on the most
popular exchanges. If you would like a wallet to exchange, hold and stake your ATOM, you can
use Exodus.
Exodus is a cryptocurrency application for your mobile device or your desktop that’s
home to over 100 cryptocurrency wallets and other crypto apps, check the link above to
learn more and download exodus today?
So how does Cosmos fit into the overall ecosystem, and why is there a need for another platform?
We touched on this at the beginning of the program.
1. Scalability 2. Usability
3. Blockchain sovereignty
In the past, scalability was an issue because of the lack of throughput Proof of Work systems
can ultimately handle. This is a fancy way of saying how many transactions a network
can process at a given time.
In order to scale, the options were to either fork code or build on top of it, which in
a codebase that's monolithic - meaning applications, networking and consensus are mixed together
- this becomes very difficult.
Ethereum was the first network to solve this additional application problem by utilizing
smart contracts in what is called an Ethereum Virtual Machine. Developers could use this
to deploy applications to the ETH network. ETH only runs at about 15 transactions per
second and we’ve seen many instances where the network has been ground to a halt with
pending transactions.
There’s also the limitations of the governance structures on ETH. Since apps run on the underlying
platform they need to abide by the Ethereum governance rules. Cosmos gives us a good example
here.
“If there is a bug in the application, nothing can be done about it without the approval
of the governance of the Ethereum platform itself. If the application requires a new
feature in the Ethereum Virtual Machine, it again has to rely entirely on the governance
of the Ethereum platform to accept it.”
As you can imagine, this could complicate the development and usability of applications.
This sovereignty issue is not limited to just ETH. Other similar blockchains have this same
issue.
Enter Cosmos. Cosmos solves these problems by allowing developers to build individual
blockchains with their own custom governance structures. It enables them to transact with
each other via a common and generic consensus and networking layer.
Can you see now why they refer to it as the internet of blockchains?
This is accomplished through a modular architecture of what they call Hubs and Zones,
which allow entirely separate blockchains to transfer tokens to each other with an
IBC connection, this craftily stands for “Inter-Blockchain Communication protocol“
and can be thought of as the glue that holds everything together.
IBC allows these separate blockchains to transfer tokens, and it could be done with a serial
connection for each Zone where they move information down a chain. But this can be slow.
If we looked at a model where every zone is connected to another zone, it would be a mess.
So, here comes the Hub, Hubs are specialized blockchains to connect zones together.
This helps increase speed because once a zone creates an IBC connection with a hub, it can
quickly and automatically connect to any other zone that’s attached to the hub.
The first hub launched in the Cosmos Network was the Cosmos hub,
you gotta start somewhere, right?
I kind of saved the best for last and what I think is the coolest aspect of cosmos. It’s
the ability to interact with other blockchains outside of the Cosmos ecosystem. I’m talking
interoperability with BTC, ETH, TRX, and well any other blockchain out there, forget about
atomic swaps, this is the real deal - on chain.
How?
It’s Magic.
No, I’m just kidding. This is done through a Cosmos created proxy like chain called a
peg zone. According to Cosmos…
“A Peg-Zone is a blockchain that tracks the state of another blockchain. The Peg-Zone
itself has fast-finality and is therefore compatible with IBC. Its role is to establish
finality for the blockchain it bridges.”
So if I want to trade a lama from Lama chain for a Taco from taco chain, Cosmos can facilitate
that for me. The assets can be on the cosmos network, a proof of work blockchain like bitcoin
or ethereum or a proof of stake network like NEO, or ALGO, or ADA or XTZ, any way you get
the point. Pretty cool, huh?
So why should a developer choose to build on Cosmos instead of another network, I guess
it all depends on what their criteria is. As we’ve seen, there are many similar implementations
of various projects because individual needs are diverse. These diverse needs are one of
the major selling points of the Cosmos ecosystem made possible by interchain interoperability.
Now that we’ve journeyed into the Cosmos and made it back, what do you think about
the future of this project? What is your Cosmos price prediction? And, If you found this video
to be useful, please make sure to hit the like and subscribe buttons for more crypto
videos from Exodus and until next time..
HODL on!