The Internet of Blockchain – Cosmos Mainnet Officially Launched
Satoshi Nakamoto shook the world with his Bitcoin whitepaper published on Oct. 31, 2008. The world was introduced to the blockchain technology. Since then, there has been no looking back and some of the most renowned and the biggest companies in the world have adopted the technology. Ethereum showed us the versatility of blockchain technology.
Blockchains have covered a long path in a very short span of time. In the past 10 years, the term blockchain has gone from particularly referring to bitcoin to describing a complete variety of projects. Today, the blockchain technology no longer relates only to bitcoin and now there are multiple blockchains operating in the market. By the end of 2017, around 5 billion dollars were raised through Initial Coin Offerings (ICOs). However, 50% of the companies that launched ICOs are now dead projects completely. But there are projects learning from the mistakes made by earlier companies and they will surely succeed.
Therefore, multiple blockchains, both public and private exists in the system. These different blockchains need to communicate and carry out their operations together. With this, the problem in the fields of scalability and operability arises. It is difficult to move the assets on one blockchain to other chains and in order to exchange the assets on different blockchains, you have to go through a centralized intermediary.
The Internet of Blockchain – Cosmos
Blockchains are about efficiency so protocols are needed to make them work together and that has to be done while maintaining scalability. Here, enters the very ambitious cosmos project. The project along with a few other such projects is working to solve the interoperability problem with the goal of maintaining the scalability.
The Cosmos project has created an internet of blockchain which connects different chains through the Inter-Blockchain Communication (IBC) protocol. The shared Cosmos Hub addresses the problem of interoperability. It is powered by the Tendermint consensus protocol that keeps track of the number of tokens in each connected chains and also manages the transfers between them.
The Scalability and Interoperability Problem
Problem 1: Scalability
Blockchains are able to process only a handful of transactions per second. With the increase in traffic, the number of transactions increases. If Bitcoin and Ethereum have to compete with Visa and PayPal, they need to decrease their transaction processing time.
PayPal manages 193 transactions per second and visa manages 1667 transactions per second, Ethereum does only 20 transactions per second while bitcoin manages only 7 transactions per second! There is only one way to improve the numbers, they have to work on their scalability.
Several solutions have been explored like Segwit and Lightning network/Raiden. They use different strategies to solve the issue. However, they have their own limitations. Segwit is a vertical scaling solution dependent on the physical capabilities of one single machine whereas Lightning Network can only handle microtransactions.
Problem 2: Interoperability
All the different blockchains have been separately built but while operating in a network they need to communicate with each other. And presently Ethereum, Bitcoin, Litecoin, etc. do not have any means to work together. In order to exchange from one chain to another, an intermediary is required to exchange tokens. Now the very idea of blockchain was based on removing intermediaries.
The actual Cosmos blockchain is quite interesting. The interoperability chains are described as hubs with spokes around them like a wheel. Every spoke represents a different chain and transactions flow both ways. Like a transaction conducted in bitcoin goes to the Ethereum blockchain, using the Cosmos blockchain as a hub.
However, this is not so easy because smart contracts are written in different programming languages depending on the chain they are designed for. This is not a problem with Cosmos. It interprets or translates the smart contracts, allowing different dApps and code to interact with each other. This removes the language barrier which prevented the blockchains from communicating.
The Cosmos Blockchain Structure
Cosmos has several blockchains running parallel with the central hub. It has a native token known as Atom which is only used for staking, creating a penalty for any malicious actor. The projects fed into the main hub are known as zones. Each zone needs to stake in order to become part of the Cosmos ecosystem. Ethermint by the Tendermint project and OmiseGo are some of the zones.
Cosmos Powered Projects
Many projects already started building their applications using Cosmos Testnet. Let’s see a few of them in detail:
1). TruStory- a social networking application where experts are paid in terms of tokens for identifying what’s true and what’s not. This application is built on Cosmos because of the obvious reasons of scalability and high efficiency which is missing in Ethereum. One of TruStory’s Staff Shane explained this reason for choosing Cosmos over other available blockchains.
2). Binance Chain- the famous cryptocurrency exchange, which is, for now managed by one central entity. As you all know, there is this big drawback of Binance being a centralized exchange. The tokens of lakhs of traders are at high risk as they are in the hands of one centralized entity. There are also possibilities of the exchange getting hacked. So Binance started working on Binance Chain which uses Cosmos to develop itself into a decentralized exchange.
These are some worthy implemented projects which are going to be live soon. Other than these, we have projects in every sectors of business like finance, industry and even gaming too.
Cosmos and Tendermint are some of the most interesting projects going on to bring in a whole new level of scalability and interoperability to blockchains. They have a very passionate and dedicated team behind them and we hope that they get all their implementations in place.