Cosmos Blockchain: How does it work?

While the endless stream of new blockchain projects we saw during 2017 and 2018 has slowed down, the blockchain scene is nowhere near a standstill. 

Rather, instead of getting lots of ill-fated projects trying to make the news every other day, the buzz is reserved these days for larger projects that actually stand a chance at changing the environment.

Cosmos is one of those projects. Although it follows what is now a trend of creating a blockchain with the specific intent of fixing the problems of other blockchains, it’s nonetheless a promising project.

Tackling the main problems with crypto

There are two big issues cryptocurrencies have run into on their way to mass adoption. These issues are scalability and interoperability. Both have been written about and described in length, but the gist of them is simple.

Scalability refers to the difficulty blockchains, particularly first-gen ones, have with processing large amounts of transactions. 

Bitcoin, the first and most famous blockchain, is said to have the ability to process less than a dozen transactions per second – something that goes against its original goal of becoming a worldwide, common use currency.

Interoperability refers to how blockchains can’t really contact or trade with each other. It’s impossible to seamlessly exchange BTC into ETH, or pay with Ripple for a merchant that accepts DASH. 

While the global financial system allows you to use your USD card to pay in EUR, with currency exchange being seamless, that’s not so for cryptocurrencies.

How Cosmos proposes a fix

Cosmos’ main proposal is to create an internet of blockchain. This would be attained by having a central, hub-like blockchain and many parallel blockchains around it, known as Zones. 

By cosmos’whitepaper, the zones would be where users interact, with the Cosmos ecosystem having as many zones as necessary. In other words, Cosmos won’t be a single blockchain, but a set of many such structures.

The hub, rather than being where all transactions take place, would serve as a centralized ledger where the ecosystem keeps track of what’s going on in all of its zones. 

Since the hub is the most important part of the ecosystem, it in itself works as a decentralized blockchain – that is, a distributed set of nodes that activate or deactivate as needed, preventing data corruption or network outages due to attacks.

Tackling scalability, one transaction at a time

Cosmos’ main take on scalability comes from its consensus protocol, called Tendermint. 

This consensus protocol aims at making transactions validate faster and requiring less power by assigning weights to each existing node. These weights are based on the amount of cryptocurrency staked and node trustability as per the blockchain’s records.

While this is hardly the first such blockchain – neural network-like blockchains have been proposed before – Cosmos uses its own set of weights and stakes that allow it to process thousands of transactions at a time.

A blockchain designed for interoperability

As for the interoperability problem, Cosmos’ basic design was made thinking of it. The structure of a hub and several zones lends itself to having different blockchains connect through it – after all, each zone is said to be a blockchain of its own.

The Cosmos hub goes further, though, allowing for one blockchain to avail the services of another one, or even for blockchains to request processing power from each other. 

This type of implementation, where blockchains can exchange processing power, is a lot like the one proposed by the BAW network, and it’s quite likely to be close to the final blockchain interoperability model the market settles for.

A bright future

Cosmos, although already live, is yet to have its planned features implemented. Its team expects to have it feature-complete by 2021 – and until then, features will be slowly rolling out as needed. This means we’re still some time away from knowing whether Cosmos’ promises will pay off.

Still, Cosmos is a promising proposalfor a blockchain and, while it might or not be the one blockchain project to finally solve the interoperability problem, it’s certainly another step towards that goal. That alone makes it a project to look out for.