Hey everyone, I’m Kris with Exodus. If I
asked you a question about being a developer
to set out and solve the problems of scalability,
usability, and sovereignty inherent in many
blockchains, you might end up with something
that looks a lot like Cosmos.
Aptly named because of the mental image we
get when thinking of our galaxy and how the
various elements exist individually but are
bound and interact together by a universal
force, this, of course, is gravity.
Now, I know you’re not here for a science
lesson, so let’s move on and take a more
in-depth look at the Cosmos network and the
ATOM cryptocurrency.
In a nutshell, Cosmos
Network is a decentralized ecosystem of independent
blockchains that can scale and connect to
one another. This includes not only blockchains
that are built on Cosmos, but also external
blockchains such as Bitcoin and Ethereum through
what’s called a peg zone. More on that in
just a few minutes but first let’s put a
name to this process. Cosmos has already done
some of the hard work for us here and has
named this an “Internet of Blockchains”
or “IoB” for short.
Let’s hear how Cosmos inventor “Jay Kwon” 
explains this...“Each individual blockchain
maintains control of its own governance, but
is interoperable with other blockchains in
the network. Blockchains that do not utilize
BFT algorithms can be connected to the Cosmos
network via “adaptor” blockchains. Cosmos
was not designed for one particular use case,
but to be adaptable to suit many different
use cases.”
Pretty simple stuff, right? Well once we get
all the fancy acronyms down we can start to
get the technology out of the way and understand
what cosmos does and how it works on a basic
level. The Cosmos network is a dual-layer
blockchain ecosystem with native token Cosmos
“ATOM” to power its transactions. The
first layer packages the networking and consensus
layers of a blockchain into a generic engine,
This allows developers to focus on the application
development instead of the protocol which
makes the network run.
Ethereum was the first to simplify the application
development through smart contracts, but as
Dapps, not independent blockchains.
This first layer is called Tendermint BFT.BFG
No, not the big friendly Giant.
BFT stands for Byzantine Fault-Tolerance and
is the consensus mechanism of the Cosmos network,
which as I said before, includes the networking
functions which are responsible for transmitting
transactions and consensus-related messages.
The second layer is the application layer,
where the Cosmos SDK is used for individuals
to create their own blockchains. The Cosmos
SDK will translate many different popular
programming languages such as, Java, C++, and others for example.
At the time of recording, ATOM is worth about
4 dollars with a market cap of around 757
million dollars. And about 100 million of
that moves around the markets every day.
ATOM is a Proof of Stake coin, which means
that you can delegate your tokens into a validator
pool and earn rewards on your holdings. The
more ATOM you stake, the more you earn. Staking,
however, locks up your ATOM and, if you want
to unstake them, the cooling-off period is
21 days.
Cosmos ATOM is sitting at #23 in the overall
crypto market cap and is listed on the most
popular exchanges. If you would like a wallet
to exchange, hold and stake your ATOM, you can
use Exodus.
Exodus is a cryptocurrency application for
your mobile device or your desktop that’s
home to over 100 cryptocurrency wallets and
other crypto apps, check the link above to
learn more and download exodus today?
So how does Cosmos fit into the overall ecosystem,
and why is there a need for another platform?
We touched on this at the beginning of the
program.
1. Scalability
2. Usability
3. Blockchain sovereignty
In the past, scalability was an issue because
of the lack of throughput Proof of Work systems
can ultimately handle. This is a fancy way
of saying how many transactions a network
can process at a given time.
In order to scale, the options were to either
fork code or build on top of it, which in
a codebase that's monolithic - meaning applications,
networking and consensus are mixed together
- this becomes very difficult.
Ethereum was the first network to solve this
additional application problem by utilizing
smart contracts in what is called an Ethereum
Virtual Machine. Developers could use this
to deploy applications to the ETH network.
ETH only runs at about 15 transactions per
second and we’ve seen many instances where
the network has been ground to a halt with
pending transactions.
There’s also the limitations of the governance
structures on ETH. Since apps run on the underlying
platform they need to abide by the Ethereum
governance rules. Cosmos gives us a good example
here.
“If there is a bug in the application, nothing
can be done about it without the approval
of the governance of the Ethereum platform
itself. If the application requires a new
feature in the Ethereum Virtual Machine, it
again has to rely entirely on the governance
of the Ethereum platform to accept it.”
As you can imagine, this could complicate
the development and usability of applications.
This sovereignty issue is not limited to just
ETH. Other similar blockchains have this same
issue.
Enter Cosmos. Cosmos solves these problems
by allowing developers to build individual
blockchains with their own custom governance
structures. It enables them to transact with
each other via a common and generic consensus
and networking layer.
Can you see now why they refer to it as the
internet of blockchains?
This is accomplished through a modular architecture of what they call Hubs and Zones,
which allow entirely separate blockchains to transfer tokens to each other with an
IBC connection, this craftily stands for “Inter-Blockchain Communication protocol“
and can be thought of as the glue that holds everything together.
IBC allows these separate blockchains to transfer
tokens, and it could be done with a serial
connection for each Zone where they move information
down a chain. But this can be slow.
If we looked at a model where every zone is
connected to another zone, it would be a mess.
So, here comes the Hub, Hubs are specialized
blockchains to connect zones together.
This helps increase speed because once a zone
creates an IBC connection with a hub, it can
quickly and automatically connect to any other
zone that’s attached to the hub.
The first hub launched in the Cosmos Network
was the Cosmos hub,
you gotta start somewhere, right?
I kind of saved the best for last and what
I think is the coolest aspect of cosmos. It’s
the ability to interact with other blockchains
outside of the Cosmos ecosystem. I’m talking
interoperability with BTC, ETH, TRX, and well
any other blockchain out there, forget about
atomic swaps, this is the real deal - on chain.
How?
It’s Magic.
No, I’m just kidding. This is done through
a Cosmos created proxy like chain called a
peg zone. According to Cosmos…
“A Peg-Zone is a blockchain that tracks
the state of another blockchain. The Peg-Zone
itself has fast-finality and is therefore
compatible with IBC. Its role is to establish
finality for the blockchain it bridges.”
So if I want to trade a lama from Lama chain
for a Taco from taco chain, Cosmos can facilitate
that for me. The assets can be on the cosmos
network, a proof of work blockchain like bitcoin
or ethereum or a proof of stake network like
NEO, or ALGO, or ADA or XTZ, any way you get
the point.  Pretty cool, huh?
So why should a developer choose to build
on Cosmos instead of another network, I guess
it all depends on what their criteria is.
As we’ve seen, there are many similar implementations
of various projects because individual needs
are diverse. These diverse needs are one of
the major selling points of the Cosmos ecosystem
made possible by interchain interoperability.
Now that we’ve journeyed into the Cosmos
and made it back, what do you think about
the future of this project? What is your Cosmos
price prediction? And, If you found this video
to be useful, please make sure to hit the
like and subscribe buttons for more crypto
videos from Exodus and until next time..
HODL on!
