Cosmos (ATOM): A Guide to the Internet of Blockchains

Since the rise of Ethereum in 2017, next-generation blockchains have emerged. Many have attempted to address the most significant barriers to adoption, such as scalability and interoperability. One such project that has gained traction in recent years is Cosmos (ATOM), a blockchain of blockchains.

Cosmos is an extremely ambitious project in an extremely ambitious field. Through its blockchain interoperability platform, it aspires to be the blockchain that connects all other blockchains.

What is Cosmos?

Cosmos distinguishes itself from the other crypto blockchains by emphasising two key features: 

  • Interoperability
  • Customization

In a nutshell, Cosmos bills itself as a project that solves some of the blockchain industry’s “hardest problems.” By providing an ecosystem of connected blockchains, it hopes to provide an antidote to “slow, expensive, unscalable, and environmentally harmful” proof-of-work protocols like those used by Bitcoin.

Another goal of the project is to make blockchain technology less complex and difficult for developers by using a modular framework that demystifies decentralised apps.

Finally, an Interblockchain Communication protocol makes it easier for blockchain networks to communicate with one another, preventing industry fragmentation.

How does Cosmos work?

The Cosmos network consists of three layers:

Applications: They process transactions and keep the network up to date.

Networking: This allows for communication between zones and the hub.

Consensus Mechanism: The Proof-of-Stake mechanism that performs transaction authentication.

Cosmos, at a high level, serves as a hub where different networks can exist independently, with the hub facilitating interactions between them.

What are the tools that enable the functioning of the Cosmos network?

Cosmos prioritises independent blockchain sovereignty, which means they must still secure themselves, feature their governance, and facilitate their validators.

Inter-Blockchain Communication (IBC) Protocol: 

The Cosmos network is made up of independent blockchains known as ‘zones,’ which are linked to the main chain or the Cosmos Hub. The IBC Protocol is responsible for connecting each zone to the hub.

Each zone validates user accounts, executes transactions, creates new Atom tokens, and distributes rewards. Furthermore, each zone can be modified to incorporate performance enhancements. Every zone is self-contained and requires no intervention.

Tendermint Byzantine Fault Tolerance (BFT) Engine:

This is the most noticeable aspect of the Cosmos network. The Tendermint BFT Engine is an algorithm that allows blockchain developers to continue creating and adding new zones to the network without having to rewrite the code. It is also in charge of ensuring strong security and adding new blocks to the chain.

The Tendermint Core – the Proof-of-Stake consensus mechanism that governs the massive network of transaction validators – is at the heart of this powerful blockchain (or nodes). When a change or upgrade is proposed, these validator nodes must all agree to a vote.

Your chances of becoming a validator on Cosmos are determined by the number of Atom tokens you stake.

Cosmos Software Development Kit (SDK):

A software development platform must facilitate the creation of new blockchains. The Cosmos SDK assists developers by including all of the necessary tools, such as the Tendermint BFT Engine and the Tendermint Core.

These tools in the kit ensure the staking, minting, and distribution of Atom, making it very easy for coders to make additions/changes to the Cosmos network. It essentially allows for customization.

Why is Cosmos called the ‘Internet of Blockchains’?

The Cosmos network allows developers to keep adding chains to the hub with new features. As a result, a vast network of chains is created that is constantly communicating with one another and exchanging data in real time.

This is similar to the ‘Internet-of-Things (IoT)’ concept, in which all devices in a network are connected and autonomously make changes to improve overall system performance. As a result, Cosmos has been dubbed the “Internet of Blockchains.”

How Can Cosmos Improve on Blockchain Interoperability?

Interoperability has been a difficult task for developers since the inception of blockchain.

Interoperability is what allows two or more systems to communicate with one another. Consider emails sent from a Gmail account to a Hotmail account. Or an Android phone that can exchange data with Apple’s iOS.

As in the case of a specified blockchain, single structures are created first. Still, getting the systems to communicate is necessary. Otherwise, they are ineffective and may act as a barrier to technology adoption.

Cosmos, with over $151 billion in digital assets under management, is the first entirely free platform to enable interoperability between different systems, including Binance Chain, Terra, and, to name a few.

How Does Cosmos Plan to Deal with the Scalability?

Cosmos employs two kinds of scalability. Vertical scalability refers to scaling the blockchain itself, which means moving away from proof-of-work to increase the number of transactions per second so that the network does not experience bottlenecks that render it completely unusable. Vertical scalability, on the other hand, will always have a limit. Transactions that can be completed quickly will eventually hit a snag and cause another bottleneck.

Horizontal scalability comes into play here. The idea is to have a multi-chain architecture with many chains running concurrently but with the same set of validators, which is why the Hubs and Zones concept was developed. This means that blockchains with this horizontal scalability can theoretically be infinitely scalable.

What problem does Cosmos solve?

Cosmos’ goal is to enable communication between all blockchains while addressing the three major blockchain issues:


The PoS consensus algorithm, which secures the network, ensures its long-term viability. When compared to the PoW consensus algorithm, PoS reduces carbon footprint by 99%.


Cosmos scalability can be achieved by duplicating a blockchain to alleviate congestion or by dividing the apps into multiple application-specific blockchains. Interchain token transfers enable these multiple chains to operate as a single network.


The Cosmos free SDK enables developers to create autonomous blockchain apps without incurring ongoing costs. These blockchains can easily interconnect without requiring smart contracts to exist on another blockchain, avoiding high transaction fees due to network congestion while developing better scaling features.

Cosmos vs. Ethereum

Several comparisons have been made between the Ethereum blockchain and the Cosmos blockchain.

These parallels have prompted several cryptocurrency enthusiasts to wonder, “Is Cosmos Like Ethereum?

The short answer is no.

In terms of functionality, the Cosmos blockchain is not a competitor or a drop-in replacement for the Ethereum blockchain. Nonetheless, Cosmos offers complimentary blockchain development frameworks designed to help network developers launch their blockchains. The Ethereum blockchain currently does not provide this infrastructure to its platform users.

However, we must state that some blockchains built on the Cosmos blockchain compete with the Ethereum blockchain.

Cosmos vs. Polkadot

In terms of functionality, the Cosmos blockchain is similar to the Polkadot network.

The Cosmos and Polkadot blockchains were created to address issues with interoperability and scalability in blockchain development. Aside from that, both blockchains were created to serve as a platform for connecting other blockchains.

As a result, cross-chain transactions are made easier. Despite these similarities, both blockchains differ significantly.

Cosmos is more concerned with adoption, whereas Polkadot is more concerned with security. Furthermore, blockchains employ various consensus algorithms.

Cosmos employs the Tendermint Consensus Algorithm, whereas Polkadot employs the GRANDPA Consensus Mechanism to control their network’s Relay Chains.

The Cosmos blockchain currently outperforms the Polkadot blockchain in terms of functionality. Developers can use the Cosmos network to create any type of blockchain-based project they want.

Conclusion: Is Cosmos a good investment?

ATOM has seen significant gains since its inception, accounting for a nearly 600% increase in value. In September 2021, ATOM reached an all-time high of $38.78.

Although each zone can create and use its cryptocurrency, ATOM is the primary token used in the Cosmos ecosystem. It is essential for maintaining network interoperability and can be held, spent, sent, or staked.

With an increasing number of network zones relying on ATOM’s security and transparency as a multiasset distributed ledger, ATOM gains value, especially as adoption grows. Other than gaining rewards, it is convenient for Cosmos users to own and stake ATOM to gain the ability to vote on network upgrades.

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