Cosmos Network: How Does It Work

Cosmos (ATOM) on EXMO

The Cosmos network was an endeavor to establish an infinitely scalable Blockchain. The system claims to be the following kind of Internet environment: a decentralized system combining cryptography algorithms and all cryptocurrencies for seamless trading, with emphasis on compatibility. ATOM has become its system token for transactions and network development.

Cosmos (ATOM) Price

Buy Cosmos (ATOM) coin

What is ATOM?

The ecosystem has its coin or Cosmos token, which is called ATOM. At the moment, 237,928,231 units of cryptocurrency are in circulation. The token was presented in 2017 and Cosmos ICO raised $17.3 million in 30 minutes.  Ten percent of the tokens were retained by the developers of the system, and the remaining bought out by investors.

Cosmos crypto cannot be mined, such as Bitcoin. To create tokens, we use the PoS algorithm. The more transactions a user makes, the more likely they become a transaction verification node in the future. The more coins a user has obtained, the more opportunities there are to become a test link in the chain. For confirmation of transactions, participants in the system receive a reward. Also, some tokens can be delegated to another verification node, and in return, receive a share of the bonus.

If the verification node confirms a fraudulent transaction, the network automatically removes it  from the system. The balance, in this case, remains unchanged for 21 days. During this time, the legality of all tokens is checked, and coins mined fraudulently are destroyed. This is because, in 2019, a hacker attack occurred while maintaining a balance. Fraudulent users managed to withdraw their tokens, avoiding destruction.

ATOM trading is available on EXMO cryptocurrency exchange. We provide the opportunity to trade ATOM to BTC, EXM, and fiat currencies (dollars, euros).

What is Cosmos Network Trying to Do?

The project started in 2014 when the founders created an SDK platform to facilitate blockchain development. A decentralized ecosystem allowed independent chains to fit together seamlessly. An application or an intranet created using distributed registry technology can be considered  such a chain.

The chains are separated into zones but are interconnected through hubs. Such hubs are nodes for verifying the legality of transactions. The same nodes provide compatibility between different Blockchains. For their work, nodes receive a reward in the form of ATOM tokens.

Each such network has a unique software stack and autonomous management. This approach allows users to bind Blockchains working on the new Proof-of-Stake scheme with the classic Proof-of-Work chains.

Cosmos Fundamental Value

The system offers an "improved model" of the Blockchain, which is characterized by:

  • Scalability;

  • Interoperability;

  • Usability;

  • Certainty.

Additionally, the system suggests coders a set of ready-made tools for implementing new projects according to customer needs. Each of these applications will be compatible with the others but will have independent management.

The scalability problem of the classic distributed registry is the slow mechanism for validating transactions. The more users on the network, the more time-consuming and more expensive operations become. To solve this problem, the founders of Cosmos created Tendermint Core. This consensus mechanism has a lock time of one second and is capable of processing 10,000 proceedings per second.

Tendermint records the same transactions in the same sequence on each computer on which they run. It functions as a peer-to-peer network protocol. The second component is the application chain interface (ABCI). It ensures that operations are understandable in any programming language. Multiple hubs (centers) for checking chains also strengthen overall decentralization.

How to Stake Cosmos (ATOM)?

Following  the launch of the Cosmos project, ATOM tokens fell into the trading pairs of some cryptocurrency exchanges. There they can be purchased for other coins or fiat currencies due to various crypto exchanges. ATOM holders can participate in the confirmation of transactions and earn rewards on this. The process is as follows:

  • When transferring tokens from one user to another, the system blocks the desired amount of coins in chain A.

  • The second user receives proof that a specific amount is blocked, and the tokens are real.

  • The system randomly selects validators; two-thirds of these nodes are required to confirm the transaction.

  • Chain B accepts tokens if the previous condition is met.

  • Tokens transfer from chain A to chain B.

Validation nodes receive a reward for their work. With the increase in number of coins,  chances are also increased that the same nodes will be selected by the system again to check future transactions.

There are two types of coins in the system:

  1. ATOM is the primary token  used as a cryptocurrency.

  2. Photons are coins for paying commissions for transactions in the system. Since Cosmos is a multicurrency system, this method avoids regular conversions.

After checking the transactions, the nodes receive a reward with both forms of tokens in any proportions.

How to buy ATOM on EXMO?

Any coins, whether Bitcoin, Algorand, or ATOM, are easy to buy on the cryptocurrency exchange. EXMO offers two options for a deal:

The second method is the easiest and suitable for beginners. It only requires a registered account and a cryptocurrency wallet tied to the account. If there are enough funds on balance for the transaction, select the desired currency pair, and click the Exchange button. Operations are carried out at a fixed exchange rate.

If a client wants to bid or purchase ATOM at a better price, they need to go to the Trading section.


The list of currency pairs contains four exchange options:

  1. EXM;

  2. BTC;

  3. USD;

  4. EUR.

At the bottom of the page on the left, there are two columns for buying or selling coins with a built-in calculator. There you can create the required type of order for each operation:

  1. The Market for an instant transaction at the current price.

  2. The limit for buying at a rate equal to or lower than the set price (for sale, the amount will be similar to or higher than the fixed price).

  3. Stop for delayed automatic operations.

The currency calculator on the page shows the total amount of expenses. It includes the exchange commission for the transaction.

Conclusion

The project is instrumental and promising. The system uses all the advantages of Blockchains in the form of decentralization and reliability. At the same time, developers have added operational scalability and the ability to combine different Blockchains in one ecosystem.

Cosmos is a two-layer network in which each Blockchain operates independently providing a more thorough verification of transactions. New blockchains are constructed applying the Cosmos SDK and Tendermint Core and then coupled via an IBC layer.

ATOM's own cryptocurrency is growing steadily in value. Its advantage is that it does not use the traditional mining mechanism. Confirmation of transactions does not involve expensive equipment and does not consume tremendous amounts of electricity.

A holistic approach allows us to predict further active use of the system. If development continues along the planned path, the project may become one of the most convenient IT technologies.

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