What is Cosmos (ATOM) and How Does it works?

    Pathik Bhattacharya
    Pathik Bhattacharya
    Published on March 12, 2023 09:08 AM

    Cosmos intends to build a "Internet of Blockchains" in which any blockchain may interact, share data, and transact with any other.

    What is Cosmos? Why It’s Called “Internet of Blockchain”
    Source: Cosmos

    Cosmos is a decentralized network of interconnected blockchains that enables the exchange of data and currency across them. Cosmos, which was launched in 2019, intends to address the issue of blockchain interoperability by offering a framework for establishing and linking separate blockchain networks. 

    Cosmos' unique design allows distinct blockchains to connect with one another, resulting in a seamless network of blockchain applications. In this article, we will discuss: What is Cosmos, How does Cosmos Works, Cosmos ATOM and more. So, let's dive into the world of the Cosmos and explore what it is and how it works.

    What is Cosmos?

    Cosmos (ATOM) is a decentralized blockchain network that allows multiple blockchain systems to communicate and interoperate. Cosmos' primary purpose is to eliminate the need for centralized servers, resulting in a platform that is trustless, transparent, and safe. 

    The network was created to address the issue of blockchain interoperability, which has been a key barrier for developers since blockchain technology's introduction.

    The goal of interoperability is to facilitate communication across disparate systems, allowing them to share data and conduct transactions in real-time. 

    In the case of blockchain, multiple networks run independently, necessitating the development of a platform capable of enabling cross-chain communication. Cosmos (ATOM) was created to address this issue by providing an interoperable network of open-source blockchains, sometimes known as the Internet of blockchains.

    The Cosmos white paper was released in 2016, and the network swiftly established itself as a game-changer in the blockchain sector. Cosmos' creators wanted to build a platform that could facilitate transactions between multiple blockchains, independent of their underlying technology.

    Cosmos (ATOM) enables diverse blockchain systems to connect and interoperate without the need for a single authority, making it a decentralized and safe platform. With approximately $151 billion in digital assets under administration, the network is the first to provide interoperability between diverse systems, including Binance Chain, Terra, and

    How Does Cosmos Works?

    Cosmos operates by offering a platform for constructing and linking autonomous blockchain networks. It allows multiple blockchains to connect with one another, resulting in a network of blockchain applications that is seamless.

    Cosmos employs a one-of-a-kind architecture based on a hub-and-spoke paradigm, with the hub referred to as the Cosmos Hub and the spokes referred to as zones. The Cosmos Hub is the network's primary chain, and it is in charge of coordinating inter-blockchain communication across the various zones. Each zone has its own blockchain with its own consensus method, coin, and governance structure.

    The usage of a technology known as the Inter-Blockchain Communication (IBC) protocol facilitates inter-blockchain communication inside Cosmos. The IBC protocol allows distinct blockchains to exchange and receive data and value from one another, allowing users to engage with apps across several blockchains in real-time.

    Cosmos employs a Tendermint consensus algorithm, which is supposed to be fast, secure, and energy-efficient in addition to the IBC protocol. The Tendermint algorithm allows for quicker transaction processing while also ensuring network security by eliminating double-spending and other threats.


    Working of Cosmos

    Source: Cosmos

    Tendermint BFT and the ABCI

    Tendermint BFT is a system that combines a blockchain's networking and consensus layers into a generic engine, allowing developers to focus on application development rather than the complicated underlying protocol. Tendermint thereby saves hundreds of hours of development work. Tendermint is also the name of the byzantine fault tolerant (BFT) consensus method employed by the Tendermint BFT engine.

    The Tendermint BFT engine is linked to the application via the Application Blockchain Interface socket protocol (ABCI). This protocol may be wrapped in any programming language, allowing developers to select the language that best suits their needs.

    Tendermint BFT is a cutting-edge blockchain engine with a number of features that make it appealing to developers wishing to construct safe, high-performance, and customisable blockchains. Below are the major characteristics that distinguish Tendermint BFT:

    Public or private blockchain ready: Tendermint BFT is extremely adaptable, and it can be used to create both public and private blockchains. Its function is to manage blockchain networking and consensus, allowing nodes to propagate transactions and validators to agree on a set of transactions to add to the blockchain.

    High Performance: Tendermint BFT performs exceptionally well, handling thousands of transactions per second and having a block time of about one second. As a result, it is a highly scalable system that can handle enormous transaction volumes without sacrificing speed or security.

    Instant Finality: One of the Tendermint consensus algorithm's essential qualities is immediate finality, which means that forks are never produced as long as more than one-third of the validators are honest (byzantine). Customers may be confident that their transactions will be completed as soon as a block is formed, making it a highly dependable and secure option.

    Security: The Tendermint consensus algorithm is not just faulted tolerant, but also responsible. There is a method to assess culpability if the blockchain splits, making it a highly secure solution well-suited for business and mission-critical applications.

    Inter-Blockchain Communication protocol

    Inter-Blockchain Communication protocol is used to connect blockchains (IBC). IBC uses Tendermint consensus's immediate finality characteristic (but it can operate with any "fast-finality" blockchain engine) to allow heterogeneous chains to transfer value (i.e. tokens) or data to one other.

    What are Heterogeneous Chains?

    Heterogeneous chains, also known as multi-chain systems, refer to a type of blockchain architecture where multiple blockchains are connected to each other. These blockchains may have different consensus mechanisms, token economics, governance structures, and smart contract functionalities.

    Heterogeneous chains can be interconnected through cross-chain communication protocols, such as the Inter-Blockchain Communication (IBC) protocol used in the Cosmos Network. This allows for the transfer of assets and data between blockchains, creating a network of interoperable chains.

    The use of heterogeneous chains can offer several benefits, such as scalability, flexibility, and increased functionality.

    Cosmos Hub

    Cosmos provides a modular design for building a blockchain network, including two types of blockchain: Hubs and Zones. Hubs are blockchains that are used to link Zones. When a Zone establishes an IBC connection with a Hub, it gains access to all other Zones that are linked to it. The Cosmos Hub is the first Hub to be released on the Cosmos Network, and it is a public Proof-of-Stake blockchain with the ATOM as its native staking coin.

    Hubs connect one zone to another zone. The major hub is Cosmos Hub, however, additional hubs are also accessible.

    Every zone or hub is not required to collaborate with another, but each new zone is linked to the Cosmos Hub, the first blockchain published on the Cosmos network that records each zone's status and vice versa.

    Each zone is capable of operating independently, from verifying identities and transactions to producing and distributing new tokens and implementing blockchain updates.


    Cosmos hub

    Source: Cosmos

    Cosmos’s Native Token: Cosmos ATOM

    The Cosmos Network's native cryptocurrency is ATOM, which is a decentralized ecosystem of linked blockchains. ATOM powers the Cosmos Hub, the major hub in the Cosmos Network, and acts as the primary mechanism of exchange and settlement between the many zones and applications established on the Cosmos Network. 

    ATOM is also crucial to network interoperability, allowing multiple blockchains to communicate and transact with one another easily. ATOM holders can stake their tokens to engage in the network's governance and consensus process and receive benefits for their involvement, in addition to using them as a method of payment.

    As the Cosmos mainnet started, the first ATOM tokens were handed to the first contributors, token sale participants, the Cosmos Foundation, and core developers. As an incentive for network validators, new ATOMs are created.

    What Problems Does Cosmos Solve?

    Cosmos is a blockchain network that tries to address various issues confronting the blockchain industry. Following are some of the major issues that Cosmos seeks to address:

    Interoperability: One of the most significant difficulties confronting the blockchain industry is the lack of interoperability among different blockchain networks. Cosmos overcomes this issue by establishing a network of interconnected blockchains that may communicate with one another in real-time.

    Scalability: The blockchain sector also has scalability issues. Several present blockchains are unable to manage a significant volume of transactions, resulting in long transaction times and hefty costs. Cosmos intends to address this issue by offering a scalable network capable of handling thousands of transactions per second.

    Security: Following multiple high-profile hacks and assaults, security is a fundamental concern for blockchain networks. Cosmos overcomes this issue by offering a safe, Byzantine Fault Tolerant (BFT) consensus method that assures the network's security and resistance to assaults.

    Customizability: Another issue confronting the blockchain sector is a lack of customization. Several existing blockchains are inflexible and difficult to customize. Cosmos solves this issue by offering a modular design that allows developers to tweak and construct their own blockchains on top of the Cosmos network.

    Vendor lock-in: Many blockchain networks are designed to lock users into their platforms, making it difficult for users to switch to other platforms. Cosmos addresses this problem by providing a network of interconnected blockchains that allow users to easily switch between different platforms.

    Cosmos vs Ethereum

    Cosmos and Ethereum are both blockchain platforms that allow developers to create decentralized applications (dapps) and smart contracts. However, there are several differences between the two platforms.

    Scalability: One of the biggest differences between Cosmos and Ethereum is scalability. Ethereum currently faces scalability issues, which means that as more users join the network, the network becomes slower and more expensive to use. Cosmos, on the other hand, is designed to be highly scalable, with the ability to handle thousands of transactions per second.

    Interoperability: Cosmos is designed to be an interoperable platform, meaning that it can communicate and transfer data and assets between different blockchains. Ethereum, on the other hand, is more closed off and operates mainly within its own ecosystem.

    Consensus mechanism: Ethereum uses a Proof-of-Work (PoW) consensus mechanism, which requires miners to solve complex mathematical equations to validate transactions and add new blocks to the chain. Cosmos, on the other hand, uses a Proof-of-Stake (PoS) consensus mechanism, which allows for faster transaction processing and requires less energy consumption.

    Governance: Cosmos has a more flexible governance structure compared to Ethereum, allowing for greater participation from token holders in the decision-making process. Ethereum is more centralized, with decisions being made by a smaller group of developers and stakeholders.

    Use cases: Ethereum is currently the dominant platform for creating dapps and smart contracts, with many popular projects like Uniswap and Aave built on top of the Ethereum blockchain. Cosmos, on the other hand, is still relatively new and has yet to gain widespread adoption in the dapp development community.

    Here is a comparison table between Cosmos and Ethereum:





    Tendermint consensus algorithm

    Proof of Work or Proof of Stake


    Yes, via IBC protocol

    Limited, via atomic swaps and bridges




    Smart Contract

    Yes, via Cosmos SDK and Ethermint

    Yes, via Solidity and other languages


    Yes, via on-chain governance module

    Yes, via Ethereum Improvement Proposals (EIPs) and Ethereum Improvement Protocols (EIPs)



    Ether (ETH)

    Programming Language


    Solidity, Vyper and other languages

    Founders of Cosmos

    Cosmos' development is the product of collaboration between several teams. The Swiss Interchain Foundation (ICF), a non-profit organization that sponsors and promotes open-source blockchain initiatives, and the Tendermint team provided the first resources and funding for its development.

    Jae Kwon and Ethan Buchman, two software developers, co-founded the Cosmos network in 2014 while also developing Tendermint, the consensus algorithm that will power Cosmos. Kwon and Buchman wrote the Cosmos white paper in 2016, and the software was launched in 2019.

    In 2017, the Interchain Foundation raised nearly $17 million in its first round of financing with a two-week initial coin offering (ICO) of the ATOM token.

    Tendermint Inc. secured $9 million in a Series A investment round in 2019 to continue the project's development. Jae Kwon departed the project in early 2020, claiming to keep active regardless, while Ethan Buchman, the other co-founder, is still president of the Interchain Foundation Council.

    Is Cosmos a Good Investment?

    Cosmos (ATOM) has increased in value by almost 600% from its inception, reaching an all-time high of $38.78 in September 2021. Being the core token of the Cosmos ecosystem, ATOM is critical to network interoperability and may be kept, spent, transmitted, or staked.

    With an expanding number of network zones relying on ATOM's security and transparency as a multi-asset distributed ledger, ATOM gains value, especially as usage grows. Cosmos users may own and stake ATOM to get the right to vote on network enhancements and receive prizes in the process.

    Nonetheless, investors should be aware that ATOM's circulation supply is not limited. Cosmos instead changes the number of tokens issued dependent on the number of ATOM invested. This implies that the token's value might possibly be diminished over time as more tokens are generated.

    Nonetheless, investing in Cosmos (ATOM) is rather simple, as the cryptocurrency is available on major exchanges including Coinbase, Binance, and Kraken. Before investing in Cosmos or any other cryptocurrency, as with any other investment, it is critical to undertake extensive study and due diligence.

    Cosmos FAQs

    What is Cosmos Network?

    Cosmos Network is an ecosystem of interconnected blockchain networks that allows interoperability and communication between them.

    What is Cosmos cryptocurrency?

    Cosmos cryptocurrency is called ATOM. It is the native token of the Cosmos Network and plays a crucial role in maintaining interoperability across the network.

    What is the purpose of Cosmos?

    The purpose of Cosmos is to solve the issue of blockchain fragmentation and lack of interoperability by creating an ecosystem of interconnected blockchains.

    Who created Cosmos?

    Cosmos was created by Jae Kwon in 2014.

    What is the difference between Cosmos and other blockchain networks?

    Cosmos differentiates itself from other blockchain networks by offering interoperability and communication between different blockchains, whereas other networks operate as standalone entities.

    How does Cosmos achieve interoperability between blockchains?

    Cosmos achieves interoperability between blockchains through the Inter-Blockchain Communication (IBC) protocol, which allows two heterogeneous blockchains to transfer tokens to each other.

    How can I invest in Cosmos?

    ATOM, the native cryptocurrency of the Cosmos Network, is available for trading on major cryptocurrency exchanges such as Coinbase, Binance, and Kraken.