To understand ATOM currency, you must start with the blockchain platform Cosmos. Blockchain platform Cosmos has received a lot of attention with the recent launch of its mainnet. Dubbed the "Internet of Blockchains" by its founding team, Cosmos aims to create an encrypted network united by open source tools to simplify transactions between them.
Cosmos’ goals and vision
Cosmos’ goal is not to prioritize its own network, but to build an ecosystem of networks where data and tokens can be shared programmatically without the need for a central party to facilitate activity. This makes Cosmos a reliable cryptocurrency that solves an important problem in the crypto industry: connecting blockchains, allowing a single cryptocurrency to excel in one specific area and then work with other blockchains with complementary strengths. Each currency does not have to solve every problem to be successful.
However, there is also a lot of uncertainty surrounding the current regulation of the industry. Crypto investors still need to pay attention to market uncertainty and potential crises.
ATOM coin introduction
ATOM coin is the main cryptocurrency that exists on the Cosmos platform and is designed to facilitate communication, expansion and interoperability between independent chains. Projects launching on the Cosmos network can have their tokens exchanged without chaos. Cosmos is organized as a modular solution built for use with various types of application-specific blockchains. These chains will be easier to develop and incorporate the ability to transfer value from one to another without affecting their mutual sovereignty.
Beyond that, Cosmos sells itself as a toolkit, with modular and adaptable tools available to developers who are ready to start working on the decentralization of the internet and related financial infrastructure.
Basic components of Cosmos
The Cosmos network consists of three layers:
Application: Process transactions and update network status
Networking: Allows communication between transactions and blockchain
Consensus: Help nodes agree on the current state of the system
To tie all the layers together and allow developers to build blockchain applications, Cosmos relies on a set of open source tools.
Tendermint
The most important element of this layered design is the Tendermint BFT engine, which is part of the network and allows developers to build blockchains without having to code from scratch. Tendermint BFT is an algorithm used by a network of computers running Cosmos software to secure the network, validate transactions and submit blocks to the blockchain. It connects to applications through a protocol called Application Blockchain Interface.
Tendermint’s relationship with ATOM
At the heart of Tendermint is Tendermint Core, a proof-of-stake (PoS) governance mechanism that keeps a distributed network of computers running Cosmos Hub in sync. In order for participants ("validator nodes") to power the blockchain and vote on changes, they first need to stake ATOM. To become a validator, a node needs to be among the top 100 nodes staking ATOM. Voting rights are determined by the amount of staked ATOM.
Users can also delegate their tokens to other validators, assigning them votes while still receiving a portion of the block reward. Validators are incentivized to perform honestly, as users have the flexibility to easily switch between validators to whom they delegate ATOM based on their voting preferences.
Cosmos Hub and Zones
Cosmos Hub is the first blockchain to launch on the Cosmos network. It was built to act as an intermediary between all independent blockchains created in the Cosmos network, called "zones." In Cosmos, each zone is able to perform its basic functions on its own. This includes validating accounts and transactions, creating and distributing new tokens, and performing changes to its own blockchain. The mission of the Cosmos Hub is to facilitate interoperability between all areas within the network by tracking its status.
Advantages of ATOM coin
Blockchain Internet
One problem facing the crypto world is that individual blockchains are not good at interchanging with each other. If you’re looking for an easy and affordable way to move crypto assets around the world, that’s not practical. Although not exactly the same, to put it simply, the situation is similar to that some places can only pay with Visa cards, and some places can only pay with MasterCard cards. You must have encountered a situation where you can only use a certain card at certain times, and it sometimes makes you feel very inconvenient.
This is why interoperability is important. This is the driving force behind Cosmos and why it is considered the Internet of Blockchains. Cosmos is also scalable and can process transactions quickly and cheaply. It says every transaction on the network costs $0.01. To give you some context, CoinMetrics said in March that the median fee on Ethereum (ETH) was around $10.
Hub technology
Some interoperability solutions do not attempt to send tokens between networks. Instead, they use smart contracts to lock these tokens on one platform and then mint a corresponding number of tokenized copies on another platform. For example, instead of sending 5 Bitcoins from the Bitcoin blockchain to Ethereum, this approach might lock 5 Bitcoins and issue 5 pegged tokens on another blockchain, such as Wrapped Bitcoin ( WBTC).
In contrast, Cosmos uses hubs to allow blockchains to actually communicate with each other. Each Hub can connect to many other blockchains. This can be achieved through Cosmos’ own tool, Inter-Chain Communication (IBC), launched last year.
More than 255 applications
Being used by people is important for any cryptocurrency. Great technology only makes sense when people actually use it. That’s why it’s great to see Cosmos has 255 applications running on its network, including big names like Binance Smart Chain and Crypto.com.
One area that investors need to watch carefully is the Cosmos fee structure. Ethereum, for example, generates revenue by charging ETH transaction fees to all applications on its network, but Cosmos does not operate this way. For example, Crypto.com users pay for Cosmos applications using its native token (CRO) instead of ATOM.
In summary, Cosmos and ATOM coins provide a powerful platform and tools designed to solve the problem of blockchain interoperability. As more applications and blockchains join the Cosmos network, the value and utility of ATOM coins will continue to increase. Investors still need to carefully consider market risks and regulatory uncertainties when investing in cryptocurrencies.