<p>Interoperability refers to the capacity of a digital system, such  as a blockchain, to exchange and share data with other similar systems,  even when they differ slightly. It&#39;s something most people didn&#39;t fully  appreciate until they entered the world of cryptocurrencies and  blockchain technologies.</p><p>Initially, blockchain platforms struggled to achieve this kind of  connectivity. In the early days, when Bitcoin was the only major  network, there wasn&#39;t much need for it. Then Ethereum appeared, offering  the ability to build decentralized applications. However, its  limitations in <a href="https://listing.help/what-is-blockchain-scalability-and-why-is-it-important/" rel="noopener noreferrer nofollow">scalability</a> and  flexibility opened the door for many new blockchains, each with its own  strengths, such as improved scalability, a focus on gaming or NFTs,  lower transaction fees, and more.</p><p>Ethereum, with its distinctive advantages, gained a large user  base. Yet, these blockchains remained isolated, much like separate  islands in a vast ocean, with very limited and complex ways to  communicate with each other.</p><p>This is where the Cosmos ecosystem comes into play. By  facilitating connections between different networks, Cosmos aims to  create a more integrated infrastructure for the development of Web3  technologies.</p><h2 id="header-0">What is Cosmos in Crypto?</h2><p>Cosmos is often described by its creators as an &#34;Internet of  blockchains,&#34; aiming to connect various crypto networks through  open-source tools that make transactions between them easier.</p><p>What sets Cosmos apart is its emphasis on flexibility and the  ability for different blockchains to work together. Instead of focusing  on growing a single network, Cosmos is designed to support an ecosystem  where multiple networks can share data and tokens automatically, without  needing a central authority to manage the process.</p><p>Each blockchain built within Cosmos, known as a &#34;zone,&#34; operates  independently but is linked to the Cosmos Hub. The Hub acts as a central  ledger, tracking the status of each zone and maintaining communication  between them.</p><p>The Cosmos Hub operates as a <a href="https://listing.help/what-are-consensus-algorithms-in-blockchain/" rel="noopener noreferrer nofollow">proof-of-stake</a> blockchain and relies on its native cryptocurrency, ATOM, for power and security.</p><p>To stay updated on Cosmos and its developments, users can visit  its website, which features an evolving roadmap. For more frequent  updates, the Cosmos blog offers tutorials, news, and insights on the  network’s growing technology.</p><h2 id="header-1">How does Cosmos (ATOM) work?</h2><p>Cosmos is a project aimed at building a network of interconnected  blockchains that can work together seamlessly. Launched in 2014 by Ethan  Buchman and Jae Kwon, the Cosmos network is composed of a Proof of  Stake main blockchain, called the Cosmos Hub, and individual blockchains  referred to as Zones.</p><p>The Cosmos Hub acts as the central chain, managing the transfer of  assets and data between these Zones while also offering a unified  security layer. All of this operates through Tendermint, a consensus  mechanism developed by Cosmos, and a general application interface.  Transactions within the network are powered by ATOM, Cosmos’s native  cryptocurrency.</p><p>The Cosmos network is structured across three key layers:</p><p><strong>1. Networking</strong> –  Enables communication between blockchains, ensuring transaction  confirmations and other messages are relayed to the Cosmos Hub.</p><p><strong>2. Application</strong> – Keeps the network updated on the latest transactions and balances.</p><p><strong>3. Consensus</strong> – Coordinates how <a href="https://listing.help/what-are-nodes-in-crypto-types-of-blockchain-nodes/" rel="noopener noreferrer nofollow">nodes</a> agree on adding new transactions to the blockchain.</p><p>These layers are integrated through a set of open-source tools.  Tendermint, for instance, combines the networking and consensus layers  into a pre-built system, allowing developers to focus only on the  application layer. This streamlines the development process, reducing  both time and resources needed to build on Cosmos.</p><h2 id="header-2">What is Cosmos Hub?</h2><p>Cosmos Hub is the main blockchain within the Cosmos network,  designed to link various custom blockchains known as Zones. It monitors  the state of each connected Zone through the Inter-Blockchain  Communication Protocol (IBC), allowing data to move smoothly between  Zones. Acting as a central ledger, the Cosmos Hub facilitates the  exchange of messages between Zones using IBC transactions. The IBC  protocol operates with two types of transactions: one confirms the  latest block’s hash in a Zone, and the other verifies the authenticity  of information sent between Zones.</p><p>For example, if two decentralized applications (<a href="https://listing.help/what-are-decentralized-applications-dapps/" rel="noopener noreferrer nofollow">DApps</a>)  on separate Zones need to interact, they send messages via Cosmos Hub.  The Hub records the communication, and both Zones log the results on  their own blockchains. This system ensures there is a trace of the  transaction across multiple chains, earning Cosmos its reputation as the  &#34;Internet of Blockchains.&#34;</p><h2 id="header-3">What are Cosmos Zones?</h2><p>Zones are custom-built blockchains within the Cosmos ecosystem,  designed for a wide range of uses. Similar to sidechains in other  blockchain systems, each Zone manages its own transactions, mints  tokens, and develops its own features. Despite their differences, all  Zones can communicate with one another as long as they are connected to  the Cosmos network and permitted to interact.</p><p>The Cosmos system uses a Hub and Spoke model, where Hubs, such as  Cosmos Hub, serve as connectors between Zones. While Cosmos Hub is one  of the most popular, other Hubs exist, and anyone can create a new Hub  or Zone, as the network is open to all. However, Hubs and Zones have the  authority to restrict which blockchains they interact with. By  connecting to a Hub, a blockchain can access any Zone linked to that  Hub, and Hubs themselves can connect with one another.</p><h2 id="header-4">What is Cosmos SDK?</h2><p>Cosmos SDK is a toolkit that simplifies the creation of custom  blockchains. As an open-source development kit, it provides users with  the building blocks to launch their own blockchain, with Tendermint Core  as its default consensus protocol. The SDK offers pre-built modules and  can be customized with plug-ins, allowing developers to design specific  features according to their needs.</p><p>Whether building public Proof of Stake chains or permissioned  Proof of Authority blockchains, the Cosmos SDK provides a flexible  platform. For example, Binance Chain was developed using Cosmos SDK,  demonstrating its wide range of capabilities.</p><h2 id="header-5">What is ATOM?</h2><p>ATOM is the native cryptocurrency of the Cosmos network, serving three main purposes:</p><p>1. It is used to pay transaction fees, with costs based on the required computational resources.</p><p>2. ATOM holders can participate in Cosmos Hub’s governance, with voting power proportional to the amount of ATOM they own.</p><p>3. It is staked by validators, who are rewarded for their role in the consensus process.</p><p>ATOM was originally distributed through an Initial Coin Offering  (ICO) and has no fixed supply, making it inflationary. New ATOM tokens  are created as <a href="https://listing.help/what-is-crypto-staking-understanding-how-to-earn-and-manage-risks/" rel="noopener noreferrer nofollow">staking</a> rewards,  with the inflation rate adjusted dynamically based on the amount of  ATOM being staked and the number of participants in the network.</p><h2 id="header-6">Staking ATOM</h2><p>To become a validator on the Cosmos Hub network, ATOM must be  staked, following the principles of a proof-of-stake system. Validators  earn rewards in ATOM for their role in maintaining the network. The  Tendermint consensus mechanism then determines which validator will  create the next block through a process involving delegators. Delegators  cast votes on which validator should be chosen, and the top 125  validators are selected for the task.</p><p>This system allows both validators and delegators to earn rewards.  However, they also face potential penalties if they fail to act  responsibly. This process, known as slashing, results in the loss of a  portion of their staked assets if a validator violates the rules.</p><p>For delegators, careful consideration of the validator they  support is crucial. In the event of a slashing, delegators can lose  between 0.01% and 5% of their staked assets, depending on the severity  of the violation.</p><h2 id="header-7">Why Use ATOM?</h2><p>The Cosmos network attracts users due to its emphasis on enabling  communication between different blockchains. This interoperability makes  the platform appealing for developers and projects looking to create  integrated systems.</p><p>Several projects have already been built on the Cosmos network,  including a stable cryptocurrency designed to maintain consistent value  and a decentralized finance (DeFi) platform that allows traders to  leverage their assets.</p><p>Investors may consider adding ATOM to their portfolios if they  believe that developers will increasingly turn to frameworks like  Cosmos, which simplify the creation and launch of custom blockchains.</p><p><img src="https://media.licdn.com/dms/image/v2/D4E12AQG5z8q5inlhxw/article-inline_image-shrink_1500_2232/article-inline_image-shrink_1500_2232/0/1727346041411?e&#61;1732752000&amp;v&#61;beta&amp;t&#61;drFBm9sSU87mu9fickrQyniA6dKisq8Mp8fF-lPiAU8" /></p><p>For more insights and updates on the crypto world, don&#39;t forget to check out our blog at <a href="https://listing.help/blog" rel="noopener noreferrer nofollow">Listing.Help</a></p>

What Is Cosmos (ATOM)?

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Sergei Khitrov

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