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The Cosmos (ATOM) 101 Cryptocurrency Guide

Cosmos is a decentralized system of blockchains created by All In Bits Inc., which launched on March 14, 2019. Cosmos was created for use as the foundation of a new generation of internet technology. Cosmos is a bit of a melting pot, working against forks in other currencies to instead bring them together by increasing interoperability. ATOM is the currency which currently tokenizes these transactions.

How Does it Work?

Cosmos is powered by a consensus algorithm known as Tendermint. This consensus algorithm has many features such as the Byzantine Fault Tolerance which makes it able to cohesively run numerous parallel blockchains, effectively linking them. This internet of blockchains is often referred to as the Cosmos Hub and this hub allows for tokens to quickly, and securely, be transferred into other blockchains (also referred to as “zones”).


Cosmos network has three major parts which keep it running smoothly. The most important part, as mentioned above, is the Tendermint core, which works to connects the parallel blockchains. This is essential to the networking function of the Cosmos hub. Another essential part is the Application Blockchain Interface (ABI) which is what enables all the parallel blockchains to communicate with one another. This interface is language-agnostic, which means coders can build applications on it in any coding language that they choose. The final part is Cosmos SDK, which can also be referred to as “base coin.” Cosmos SDK is a development resource that can be used to lower the complexity level of building the aforementioned Application Blockchain Interface. Thus, instead of building applications or blockchains from scratch, developers are able to take a basic setup which contains all the basic features and build on it using plugins as they see fit to develop their application in less time and with less effort than it otherwise would take.

Sounds great right? Well you’re probably wondering how with all of these different applications/cryptocurrencies being coded in different languages, just how is any of this cohesive? Well thanks to the IBC Protocol, these blockchains, no matter how they are written are able to communicate. There are a few caveats however, as the IBC Protocol tends to work most effectively with high finality blockchains, meaning users can experience some difficulties when using it with some currencies.

The Byzantine Fault Tolerance

All of the Cosmos and Tendermint technology is based upon the Byzantine Fault Tolerance mentioned above, which is surprisingly not new technology. The Byzantine Fault Tolerance was discovered in 1999 after years of research in response to the Byzantine Generals Problem which was invented in 1982. The Byzantine Generals Problem addresses one of the previously existing issues regarding cohesion in the execution of an unplanned event by multiple parties. This logical issue was perceived by Leslie Lamport, Robert Shostak, and Marshall Pease.

It is a bit unclear who actually discovered the Byzantine Fault Tolerance (BFT) which effectively solves this cohesion issue. Some sources mention Satoshi Nakamoto as he uses “proof of work” in his Bitcoin blockchain, solving the issue of possible malicious nodes in his famous cryptocurrency network. However, the algorithm behind the BFT is accredited to being discovered by Castro and Liskov. This confusion over the discovery or invention of an aspect to the cryptocurrency world is not something new, as often in the online world people operate under screen names from the comfort of their own homes. Not only that, but often times teams will work together over the internet from different countries without actually meeting. Either way, its thanks to the Byzantine Fault Tolerance that we have a decentralized system of cryptocurrencies today.

Why Use Cosmos?

The Cosmos network was invented to solve a specific problem which exists in the world’s biggest blockchains (such as Bitcoin and Ethereum) and this problem is scalability. Besides just allowing more transactions to process per second than both of the previously mentioned currencies, Cosmos also allows much more flexibility when developing applications. It’s actually surprising the lack of flexibility most developers have when introducing a new application or blockchain, as they are usually restricted by coding language on the ground level. As a language-agnostic system, coders on the Cosmos network are free to use whichever language they please—a truly unique feature.



If you’ve made it this far, you’re probably wondering where the ATOM, or the token that runs the Cosmos network, comes into play. The Cosmos network runs on a proof of stake algorithm which is delegated, meaning that there are two groups of stakers, the validators and the delegators. The delegators are just that, delegators. They decide who takes part in what occurrences while the validators perform the delegated actions and validate transactions. But we live in a world where people don’t like to work for free so both groups of stakers earn rewards for these actions. And these “rewards” are the ATOM token.

During its ICO in 2017, 168 million ATOM tokens were sold earning $17.3 million dollars in just 28 minutes. ATOM quickly broke the top twenty coins on the website coin market cap with a current market cap of just over $584 million. Unlike the most popular cryptocurrency Bitcoin, ATOM supply will not be limited, but rather run on an inflationary model.

What Does This Mean for Me?

While Cosmos is a very useful technology in the blockchain world, it’s not as great for those who wish to enter on an investment standpoint. Not only will more coins eventually be added (possibly devaluing what supply already exists) but Cosmos is still fairly new technology and the firm Bluzelle actually discovered a major bug on July 6th, 2020. Although Cosmos reports to have quickly remedied the bug, this brings up the argument that perhaps the Cosmos network is not quite as fully developed as it needs to be to operate as intended. Either way, if you do consider that investing in the Cosmos technology might be for you, make sure you know and understand all the risks of investing in a volatile market such as a cryptocurrency, as well as discuss any major financial decisions with someone you trust.

Altcoins | Atom | Bft | Blockchain scalability | Blockchain technology | Cosmos coin | Cosmos ico | Erc20 | Ethereum | Ico | Proof of stake

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