Cryptocurrency Information Bureau | Currency Introduction: Is blockchain siloed? Cosmos Hub (ATOM) solves the problem! A thorough explanation of the technology that connects different chains and creates the future! #Cosmos #ATOM #Blockchain
Video explanation
Cosmos Hub (ATOM) Complete Guide: A Complete Guide for Beginners!
Hello, I'm John, a cryptocurrency blogger. I've explained a lot of cryptocurrency technologies so far, but today I'd like to talk about one of the most noteworthy projects, "Cosmos Hub" and its native token "ATOM", in an easy-to-understand way even for beginners. You've heard of Bitcoin and Ethereum, but what is Cosmos? What is ATOM used for? I'll clear up those questions for you. Let's take a look at the grand vision and possibilities of Cosmos, also known as the "Internet of Blockchains"!
Basic information about Cosmos Hub (ATOM): the blockchain translator
First, let me tell you what the Cosmos Hub is and the problem it aims to solve.
- What is Cosmos Hub (ATOM)?
Cosmos is an ecosystem that allows different blockchains to communicate with each other and exchange data. The blockchain that plays a central role is the "Cosmos Hub," and "ATOM" is the native token (currency specific to that blockchain) of the Cosmos Hub.Internet of Blockchains" This accurately represents the worldview that Cosmos aims for. - The problem we are trying to solve: Siloed blockchains
Many blockchains, such as Bitcoin and Ethereum, exist independently of each other, like countries that speak different languages. This makes it difficult to exchange information and cooperate with each other. This is called the "silo problem." Cosmos aims to eliminate this silo and create a world where blockchains can work together smoothly. - Unique Features:
- Cosmos SDK (Software Development Kit): This allows developers to build their own blockchains relatively easily. It's like building your own blockchain by combining the parts you need, like Lego blocks.
- Tendermint Core (Consensus Engine): A high-performance engine for securely and quickly approving blockchain transactions.
- IBC (Inter-Blockchain Communication):This is the core technology of Cosmos, a mechanism that allows different blockchains to communicate with each other through an “interpreter.”
By combining these technologies, Cosmos allows developers to freely create blockchains (called "Zones") for specific purposes and connect them to each other through the Cosmos Hub, helping to solve the long-standing problems in the blockchain industry: scalability and interoperability.
ATOM supply and price impact (Tokenomics)
When considering the price of virtual currency, its supply is a very important factor. Let's take a look at ATOM's tokenomics (the economic design of tokens). As you can see from the title "Cosmos Hub (ATOM) tokenomics data" in Apify's search results, this is a point of interest to many people.
- Max supply and current circulation:
ATOM does not have a clearly set issuance limit (maximum supply) like Bitcoin. This means that ATOM is an inflationary token. New ATOM is mainly issued as a reward to those who are staking (depositing ATOM to participate in network operations) to maintain the security of the network. As of June 2024, the circulation volume is approximately 6 million ATOM. - Inflation and Staking:
The inflation rate of ATOM is dynamically adjusted depending on the staking rate of the entire network (what percentage of all ATOMs are staked). There is a target staking rate (for example, 2/3 of the total supply), and if the actual staking rate falls below this, the inflation rate increases, and if it exceeds this, the inflation rate decreases. This encourages ATOM holders to stake, giving them an incentive to increase the security of the network. The current inflation rate can fluctuate between about 7% and 20% per year. - Price impact:
Since it is an inflationary token, theoretically, the value of each ATOM may be diluted as the supply continues to increase. However, factors such as the growth of the Cosmos ecosystem, increased demand for ATOM, and a decrease in market circulation due to staking can offset this inflationary pressure. In other words, if demand exceeds the increase in supply, the price will rise, and vice versa. Staking rewards are also set with this inflation in mind.
When assessing the value of ATOM, it is important to consider this inflation model and whether there is enough network growth and actual demand for ATOM to exceed it. We recommend checking the latest supply and staking status on the Cosmos official website or a reliable source.
The technical framework behind Cosmos Hub
Now, let’s dive into the more technical aspects of how the Cosmos Hub and ATOM work. It may sound complicated, but I’ll explain it in an easy-to-understand way.
First, let's review the basics of blockchain in general. Blockchain is a technology that creates a distributed ledger (a notebook with the same records for everyone) that is extremely difficult to tamper with by consolidating transaction records into units called "blocks" and linking them together like a chain. To add a new block, consensus is required among network participants.
Cosmos has further evolved this blockchain technology to create a mechanism that allows multiple blockchains to work together. The core of this mechanism is the following technology:
- Tendermint Core :
This is the consensus engine at the heart of the Cosmos ecosystem.PBFT (Practical Byzantine Fault Tolerance) It uses a type of algorithm that allows for fast transaction processing and high security. Even if there are some malicious participants, it can continue to operate correctly as long as more than two-thirds of the participants are honest. Another feature is that it has fast "finality," which means that once a transaction is approved, it cannot be overturned. - Cosmos SDK :
This is an abbreviation for "Software Development Kit" and is a toolset for developing blockchain. By using this, developers can focus on developing the logic of their applications without having to create the complex foundation of the blockchain from scratch.Application-Specific Blockchain" can be efficiently built. For example, it is possible to customize it according to the purpose, such as a blockchain dedicated to games or a blockchain specialized for specific financial transactions. - IBC (Inter-Blockchain Communication Protocol) :
This is the key technology that will make Cosmos' "Internet of Blockchains" a reality. IBC is a standard that allows blockchains with different specifications to send and receive tokens and data in a secure and reliable manner. It's like people who speak different languages sending messages to each other using a common set of communication rules (protocols). - Hubs and Zones :
The Cosmos Network has an architecture that consists of two types of blockchains: "Hubs" and "Zones".- zoneCosmos: A separate, independent blockchain that provides specific applications and services, often built with the Cosmos SDK.
- HubCosmos Hub: It connects multiple zones to each other and relays communication between zones. The Cosmos Hub is the first and most important hub in the Cosmos network. Each zone connects to the Hub through the IBC and communicates with other zones through the Hub.
This Hub-and-Zone model greatly improves the scalability and flexibility of the Cosmos ecosystem as a whole, as any issues that arise in one zone are less likely to affect other zones or the hub.
The reliability of the development team and community
No matter how great a technology is, it cannot progress without active people and a community behind it. The Cosmos Project is supported by a strong development team and a passionate community.
- Key organizations and contributors:
- Interchain Foundation (ICF)Cosmos Network is a Swiss-based non-profit organization that funds research and development on the Cosmos Network and helps grow the ecosystem. Its mission is to advance open source technology and make decentralized networks a reality.
- Ignite: Formerly known as Tendermint Inc., the company has been a major contributor to key software developments such as the Cosmos SDK and Tendermint Core. It is now focused on providing blockchain development tools and services within and outside the Cosmos ecosystem. (Note: Company and project relationships may change over time.)
- Key DevelopersCosmos' early concept and technical development was heavily influenced by talented engineers such as Jae Kwon and Ethan Buchman, whose vision is the foundation of what Cosmos is today.
- Community Activities:
Cosmos has a very active and global community. Developers, validators (network transaction verifiers), users, investors, etc. actively exchange information and discuss on online forums (e.g. Cosmos Forum), GitHub, Discord, Telegram, etc. In addition, ATOM holders can participate in the governance of the Cosmos Hub by voting, and a decentralized decision-making process is in place. Regular conferences and meetups also strengthen the community's cohesion.
The continued efforts and contributions of these organizations and communities play a vital role in enhancing the credibility and future potential of the Cosmos ecosystem.
How ATOM tokens are used and the future of Cosmos
Let’s take a look at what the ATOM token exists for and how the Cosmos Network is likely to develop in the future.
Main uses of ATOM token:
- Staking: ATOM holders contribute to maintaining the security of the Cosmos Hub by delegating their ATOM to validators (nodes that verify transactions and generate blocks) or by becoming a validator themselves. In return, they receive rewards in the form of newly issued ATOM and a portion of transaction fees. This provides an opportunity to earn passive income while protecting the network. Staking is one of the main attractions of ATOM, as seen in the search intent of "Learn step-by-step how to stake ATOM in Cosmos" in the Apify results.
- Governance: ATOM holders have the right to vote on important proposals regarding the future of Cosmos Hub (e.g. software upgrades, parameter changes, use of community pool funds, etc.). The principle is 1 ATOM = 1 vote, and the more ATOM you hold, the more influence you have, but we are exploring a mechanism to reflect the opinions of many small holders.
- Transaction Fees: When you make a transaction on the Cosmos Hub, a small amount of ATOM is required as a fee. This is an important mechanism to prevent spam transactions and to reward validators.
Use cases and future prospects for the Cosmos Ecosystem:
Cosmos' vision of an "Internet of Blockchains" is expected to be applied in a wide range of fields.
- DeFi (Decentralized Finance): There are many DeFi projects built using the Cosmos SDK. For example, decentralized exchanges (DEXs) like Osmosis provide an easy way to trade various tokens in the Cosmos ecosystem via IBC.
- NFTs (Non-Fungible Tokens) and Gaming: NFT marketplaces like Stargaze and zones dedicated to blockchain games are also appearing. Cosmos' technology is suitable for these areas, which require high-speed processing and low fees. Apify's results also include news such as "Game On: Cosmos Hub Supercharges ATOM's Utility," which shows the company's focus on Web3 gaming.
- Custom Blockchain:We are seeing an increasing number of cases where companies or specific communities are using the Cosmos SDK to build blockchains tailored to their own needs. This allows them to achieve transparency and efficiency that would be difficult to achieve with a centralized system.
- Interchain Security:This is a mechanism that allows newly created small zones to "rent" the strong security of the Cosmos Hub. This makes it easier for new chains to ensure high security from the start, improving the safety of the entire ecosystem.
- Further expanding interoperability: Cosmos is also trying to strengthen its collaboration with other major blockchains such as Ethereum and Bitcoin. This direction can also be seen from the news "Cosmos Ecosystem Targets Ethereum Integration". This will strengthen Cosmos' role as a hub that literally connects all blockchains. As shown in the Apify results "Cosmos has proposed a well-articulated roadmap up to 2025", development is proceeding based on a clear roadmap.
The modularity and flexibility of Cosmos is extremely attractive to developers, and we expect many innovative projects to emerge from the Cosmos ecosystem in the future.
Comparison with competing projects: What are Cosmos’ strengths?
In the blockchain world, there are several projects that aim to solve interoperability and scalability issues similar to Cosmos. Let’s compare them with the most representative ones.
- Comparison with Ethereum :
- ア ー キ テ ク チ ャ: Ethereum is a platform that runs smart contracts on a single giant blockchain, while Cosmos is an ecosystem of many independent blockchains (zones) working together.
- Scalability: Because Ethereum is so popular, it can suffer from transaction congestion and high fees (gas fees issue) (this is being improved with a Layer 2 solution). Cosmos has a structure that makes it easy to achieve high scalability as an entire ecosystem, as each zone processes independently.
- elasticity: The Cosmos SDK allows developers to customize the blockchain from the ground up. With Ethereum, developers must develop within the constraints of the EVM (Ethereum Virtual Machine).
- Comparison with Polkadot :
Polkadot is also a project with a very similar concept of "blockchain of blockchains" to Cosmos, and is often compared to Cosmos. There is even an article on Apify's results titled "Polkadot vs. Cosmos."- Common point: Both aim to connect different blockchains ("parachains" in Polkadot's case) and achieve interoperability.
- Main difference :
- Security Model:Polkadot is based on a “shared security” model, where the relay chain (the central chain) ensures the security of all connected parachains. Cosmos Hub also introduces interchain security, but each zone can essentially have its own security, which is more flexible.
- Governance and Slots: In Polkadot, to connect to the relay chain, you need to lock up a large amount of DOT (Polkadot tokens) in the parachain slot auction. In Cosmos, the hurdle to connect with IBC is relatively low.
- SovereigntyCosmos zones are highly sovereign and can design their own governance and token economy. Polkadot parachains follow the governance of the relay chain to some extent.
Summary of Cosmos’ strengths:
- Flexibility and sovereignty: The Cosmos SDK allows developers to build blockchains with complete freedom, with each zone operating by its own rules.
- Mature IBC Protocol: IBC is live and operational, with many tokens and data moving through the Cosmos ecosystem every day.
- Developer-friendly environment: The Cosmos SDK is supported by many developers and the ecosystem is expanding rapidly.
- Scalability: Because it is a collection of application-specific blockchains, the entire system is less likely to become congested.
While each project has impressive technology and vision, Cosmos stands out because of its flexibility and openness.
Risks and Cautions: What you need to know
Cosmos (ATOM) is a very attractive project, but when considering investing in or using it, it is important to understand some risks and precautions. This is true not only for Cosmos, but for virtual currencies in general.
- Market volatility (price fluctuation risk) :
Cryptocurrency prices are known to be highly volatile. ATOM is no exception, and large price fluctuations can occur in a short period of time. Various factors affect the price, including overall market trends, project progress, and regulatory news. - Technical risks :
Cosmos is based on advanced technology, but since it is software, the possibility of bugs and vulnerabilities is not zero. It is also necessary to take into account the risk that bugs in smart contracts and network failures could lead to asset loss. The Cosmos team pays close attention to security, but there is always a risk. - Regulatory uncertainty :
Regulations on cryptocurrencies in various countries around the world are still in the process of development, and policies vary from country to country. If new regulations are introduced in the future, this may affect the Cosmos ecosystem and the value of ATOM. - Increasing competition :
As mentioned above, there are other projects with similar goals to Cosmos. The pace of technological innovation is fast and the competitive landscape is constantly changing. Whether Cosmos can maintain its advantage will depend on continued development and the growth of its ecosystem. - Fraud and security precautions :
In the world of virtual currencies, there is a never-ending stream of phishing scams (a scheme to lure people to fake sites to steal private keys and passwords), fake airdrops (scams disguised as free distribution), hacking, and more. You are responsible for managing the private key of the wallet that stores your ATOM, and you must be extremely careful. Be wary of information from sources other than the official website and of offers that sound too good to be true. - Ecosystem Complexity :
The Cosmos ecosystem consists of many zones and applications, and it can be difficult for beginners to grasp the big picture. Literacy is required to determine which projects are promising and which information is trustworthy.
It is important to fully understand these risks, gather information yourself (DYOR – Do Your Own Research), and get involved to the extent that you can.
Expert opinions and analysis
Opinions from experts and analysts regarding Cosmos (ATOM) vary widely, but in general, its technological innovations are highly praised, especially its realization of interoperability through IBC. As can be seen from the Apify search results, there are many analyses and predictions regarding future price trends, such as "Cosmos (ATOM) Price Prediction".
Many experts point out the positive aspects:
- The leader in interoperability:Cosmos' approach to the challenge of connecting different blockchains is pioneering, and IBC is becoming widely adopted as a practical solution, which is a major advantage in realizing the vision of the "Internet of Blockchains."
- A growing developer ecosystem: The ease of use of the Cosmos SDK has attracted many developers and projects to join the Cosmos ecosystem. An active development community fosters innovation and ecosystem expansion.
- Scalability and flexibility: Since an independent blockchain (zone) can be built for each application, a specific application is less likely to affect the performance of other applications, providing high scalability and flexibility.
On the other hand, there are some points to note:
- Value and Utility of ATOM:There is ongoing discussion about how the value of the ATOM token will be linked to the growth of the entire Cosmos ecosystem, especially the balance with the inflation model. Efforts are underway to increase the utility of ATOM, such as introducing interchain security.
- Competitive environment: Competition from Polkadot and other Layer 1 and Layer 2 solutions remains strong.
- User experience: The ecosystem with a wide variety of chains and apps can seem complicated for beginners. Improving ease of use is one of the challenges for the future.
There is a lot of interest in price predictions, as they are covered by information sites such as 99bitcoins.com and Kraken, but these are merely predictions and are subject to change depending on many factors. It is important not to blindly accept specific price predictions, but to make a judgment based on a comprehensive look at the project's fundamentals (basic value), the progress of technological development, and the adoption status of the ecosystem. While expert opinions can be used as a reference, ultimately you need to examine the information yourself.
Latest News and Roadmap Highlights
The Cosmos ecosystem is constantly evolving, with noteworthy news and roadmap plans being announced one after another. Here are some highlights of recent developments and future directions. Apify's results also show that active development continues, with information such as "Cosmos has proposed a well-articulated roadmap up to 2025" and "Cosmos Ecosystem Targets Ethereum Integration."
- Expanding Interchain Security :
This is a mechanism to ensure the security of new consumer chains (chains that consume security) by using the validator set of the Cosmos Hub. In v1, all validators were required to participate, but in v2 (Partial Set Security) it becomes an opt-in method, allowing for more flexible security provision. This is expected to increase the utility of ATOM and increase the value of the Cosmos Hub. - Evolution of IBC and its connection to other ecosystems :
IBC is the foundational technology of the Cosmos ecosystem, but we are working to expand its functionality and connect it to Ethereum and other major blockchains. For example, we are developing bridge technology to bring Ethereum assets and data into the Cosmos ecosystem via IBC. This will help Cosmos evolve into an even more open "internet of blockchains." - Enhanced ATOM utility :
As seen in news such as "Game On: Cosmos Hub Supercharges ATOM's Utility with Strategic Shaga Investment," there are active efforts to increase the utility of the ATOM token itself. As ATOM is used in more and more fields such as DeFi, gaming, and NFT, it is expected that demand for the token will increase. Specifically, the promotion of liquid staking and new financial services using ATOM as collateral are being considered. - Roadmap to 2025 :
Cosmos aims to streamline decentralized application (dApp) development and improve the ecosystem as a whole, and has laid out a clear roadmap through to 2025. This is likely to include enhanced developer tools, improved user experience, and refined governance mechanisms. - Stride Swap and IBC DEX Concept :
Projects like Stride are also reportedly planning to build IBC-enabled decentralized exchanges (DEXs) on the Cosmos Hub, which could further spur DeFi activity within Cosmos. - Community-driven project integration proposals :
For example, proposals such as the “Acquisition of Stargaze” are sometimes discussed on the forum, and there are also efforts to explore integration and collaboration between projects within the ecosystem to create greater synergy.
These developments signal that the Cosmos ecosystem is maturing and continuing to evolve into a more attractive platform for more users and developers. For the latest updates, we encourage you to follow the official Cosmos blog and community forums.
よくある質問 (FAQ)
We have compiled some common questions that beginners may have about Cosmos Hub (ATOM) and their answers.
- Q1: What are ATOM tokens used for?
- A1: There are three main uses for ATOM tokens.StakingThe second is to contribute to maintaining the security of the network and receive rewards.GovernanceThe third is to vote on proposals regarding the operation of the Cosmos Hub.Transaction FeeThis is payment.
- Q2: How is Cosmos Hub different from other blockchains (e.g. Bitcoin, Ethereum)?
- A2: Bitcoin is primarily known as a means of storing and transferring value, while Ethereum is known as a platform for executing smart contracts. The biggest feature of Cosmos Hub isinteroperability" The goal is to create an "internet of blockchains" by connecting multiple independent blockchains (zones) created using the Cosmos SDK with each other using a technology called IBC, enabling the exchange of tokens and data. Another big difference is that it is easy to create blockchains specialized for specific applications.
- Q3: Where can I buy ATOM?
- A3: ATOM can be purchased at many major cryptocurrency exchanges around the world. For example, Binance, Coinbase, Kraken, and Japanese exchanges such as bitFlyer and Coincheck may handle it (the handling status varies, so please check with each exchange). Since fees and usability vary depending on the exchange, we recommend that you research and compare them yourself. There is a lot of information on how to purchase Cosmos (ATOM): A Beginner's Guide, as shown in the Apify results, so please refer to it.
- Q4: What is the future of Cosmos (ATOM)?
- A4: Cosmos's future depends on its innovative technology and grand vision of an "internet of blockchains." The ecosystem continues to expand as many projects use the Cosmos SDK to build their own blockchains and interconnect through IBC. Measures to introduce interchain security and improve the utility of ATOM are also underway, and if these are successful, the value of the Cosmos ecosystem and ATOM tokens may increase further. However, it is important to understand the risks as well as the optimistic outlook, as it is influenced by many factors, such as the overall trend of the cryptocurrency market and the status of competing projects.
- Q5: What are the advantages and disadvantages of staking on Cosmos Hub?
- A5: BenefitThe advantage of staking is that you contribute to the security of the network and receive ATOM as a reward. It can also be used as a hedge against inflation. It also gives you the right to participate in governance.DemeritThese are the risk of price fluctuations if the market price falls, and the period during which ATOMs cannot be moved freely (the unbonding period, usually 21 days), the risk of slashing (rare but possible) in which some ATOMs will be lost if the validator to which you delegate commits fraud.
Summary: Will Cosmos (ATOM) Connect the Future?
Well, today I have explained about Cosmos Hub and its token ATOM from the basics to a little more in-depth. The "Internet of Blockchains" that Cosmos aims to create has the potential to connect the current fragmented world of blockchains into one, realizing a freer and more efficient digital society.
Cosmos SDKFlexible blockchain development byTendermint CoreFast and secure consensus building, and above allIBCThese technologies are not only attractive to developers, but will also be a driving force for creating new services and experiences for us, the users.
Of course, any technology comes with challenges and risks. There are many things to be aware of, such as market fluctuations, technical challenges, and regulatory trends. However, I feel that Cosmos' vision, the active community that supports it, and the ongoing development of the technology have the power to overcome these challenges.
I hope this article helps you understand the exciting project called Cosmos (ATOM). The world of cryptocurrencies is constantly evolving, but I believe Cosmos is one to watch.
Finally, this article is for informational purposes only and does not recommend investing in any specific financial products. Investing in virtual currencies involves high risks, so please do so carefully and at your own discretion and responsibility after conducting sufficient research (DYOR – Do Your Own Research).
Links
- Cosmos official website
- Mintscan (Cosmos Hub Explorer)
- Cosmos Forum (Official Community Forum)
- Cosmos Official Blog