What is Cosmos? ATOM Explained with Animations

what does the word hub mean to you we think of Hub as the center of activity the place where all the action is happening but Hub is originally a word used in mechanics it's a place where all the spokes meet in a wheel making it incredibly important for how a bike functions hubs are important for coordination in any area of life and in a certain way this is the key Revelation behind the project that we're going to be talking about today Cosmos welcome to whiteboard crypto the number one YouTube channel for crypto education here we explain topics of the cryptocurrency world using analogies stories and examples so that anyone can easily understand them in this video we're going to be explaining what Cosmos is how it works and what they're trying to achieve long story short Cosmos is an open source blockchain project that aims to connect other blockchains to each other in order to establish an easily usable fast scalable interoperable and low fee hub for basically any use of a blockchain this is still a little vague but there's really one idea that Cosmos is all about interoperability why is it so important well in the same way that many of the amazing applications of computers did not become widespread until they could all communicate with each other over the internet and eventually the World Wide Web Cosmos sees themselves as the path to an internet of blockchains now if this sounds similar to projects like polka dot or Harmony One you're not going crazy there are many similarities especially between Cosmos and polka dot which I'm going to be covering later but the difference between the internet of blockchains and the internet is that most of the communication on the Internet is actually happening between a few centralized servers and a lot of clients and a client is just a user's computer for example millions of people use Twitter every day but all of those unique users are all interacting with one centralized points for their data the cosmos internet of blockchains would allow different blockchains to communicate with each other in a decentralized way a way where one person or one single organization is not able to completely control so how is Cosmos planning on actually making this dream a reality this is where the cosmos Hub and zone model come in hubs are often very important for systems to really take off with a high number of users and Cosmos is no different in Cosmos they took a look at the cryptocurrency landscape and saw a lot of spokes but no Hub in other words they saw a large number of blockchains with interesting use cases but the methods of communicating between these chains still left a lot to be desired in fact one of the largest vulnerabilities out there are blockchain bridges which is a tool used to move money from one chain to another Cosmos created what they call a hub and zones model they have a central Hub that facilitates the transfer of tokens across various chains the founder of the Tinder mint protocol which later became Cosmos jaequan explained the problem on Anthony pompliano's the pomp podcast like this if you want to use blockchain a but you have tokens from blockchain B it is difficult to go across the two chains using the tokens you already have now Atomic swaps attempt to solve this but are limited because they have to use specific hash algorithms and they have to be capable of handling smart contracts meaning simple and usually more secure blockchains like Bitcoin do not play well with atomic swaps there are also wallet compatibility issues so there was certainly a gap to improve this process the cosmos Hub improves this by letting any chain that has a Zone use any other chain that has a Zone without worrying about Atomic swaps or other more difficult transfer methods The Hub does this by making use of the IBC or inter blockchain communication protocol now let's get into the inter blockchain communication protocol the IBC allows for seamless transfer of tokens between all the different zones attached to the cosmos hub using something called two-way pegging this idea actually comes from an older idea in Bitcoin called side chains which could be used to scale the network you can actually check out our specific video on the lightning Network for a review of a Bitcoin side chain that's actually being used Cosmos uses this very same idea to basically create representations of coins on other chains without compromising the security of the main chain in an interview with cointelegraph in November of 2021 the CEO of tindermint said we are seeing 22 blockchains that support IBC they have all been able to connect to various decentralized exchanges available in the cosmos ecosystem such as osmosis and gravity decks so there's been a lot of cross-chain activity much more than anyone expected and we are seeing a very positive growth cycle with IBC enabled now let's talk about something else in the crypto world people often think not just about a specific business or project that they're building but they are also thinking about the future of technology money and governance because of this people often have very strong opinions about how things should be run which makes them very hesitant to partner with other projects that may infringe upon their Vision Cosmos avoids this by simply allowing other independent chains to set up zones and connect to the hub these other chains maintain their sovereignty and their governance structure which is something we'll bring up later when discussing the differences between polka dot and Cosmos but there is a distinct difference of vision between lots of people in crypto and one of these main differences is between mechanisms of consensus or basically how the project can agree on future changes now the original idea for Cosmos actually converges with a project called tindermint which differs from bitcoin's proof of work consensus mechanism let's talk about tindermint tindermint is the name of the original project created by Jay Kwon Ethan Buckman and zarco milosevic as with cosmos's overall goal the main problem solved by tenements is smooth interoperability between blockchains now they achieve this in the tenement protocol with a few different interesting features Cosmos itself is a proof-of-stake blockchain which means those who validate the blockchain have to prove that they have something at stake so that way they won't attack the network you know the usual lock your coins up if you want to contribute to the network and if you're found found guilty of making fraudulent transactions will take those coins at least this is the model that other chains have started using as well tinderman is also designed to be Byzantine fault tolerant which is just a complicated way of saying that the network can work perfectly fine even if there are a fraction of Bad actors as long as less than 33 percent of the validating power not just the total number of validators but the total voting power is not Byzantine or acting unreliably then the network is still secure now it should be noted that this is a tad smaller than bitcoin's 51 percent so it's something to keep in mind technically they do this by using a two-phase voting algorithm once two-thirds of validating power confirms a block it is then added to the chain this is partly what makes Cosmos so fast secure and can ensure interoperability on the other hand on a proof-of-work blockchain users have to wait longer for the block to be confirmed which makes it harder and slower to use especially across devices like smartphones this does come with a trade-off though as proof of stake chains are much easier to centralize in Cosmos at least right now the top five individual validators have over 25 percent of the voting power and the top 10 validators have over 43 percent of the voting power so Cosmos clearly has some interesting ideas along with some potential issues but how does this compare to projects like polkadot who aim to do something similar the main way that polka dot and Cosmos are similar is their end goal interoperability between blockchains which is definitely a massive opportunity for whoever can get it right the structural difference in how they support new blockchains is polka dots layer 0 and cosmos's SDK or software developer kit these are each new ways of creating blockchains but have different approaches to governance for example Cosmos lets creators take more control of their chain and create it how they want to the tool is literally called a software development kit where anyone can use their Suite of tools to add to the cosmos IBC in fact any project can be a part of the cosmos IBC protocol and they can retain sovereignty over their own chain on on the other hand polka dot requires more of a buy-in to their governance structure polka dot serves as layer 0 and lets you build a layer 1 parachain on top of the main relay chain as you may have saw in our explanation of polka dot a huge feature of using their network is that they provide security features built into any blockchain that's created on the polka dot Network Cosmos has a more hands-off approach allowing the creators of those chains to customize their chain how they would like and simply provide the necessary tools to connect it to the cosmos Hub and use the IBC to become part of the network in short polka dot focuses on security and Cosmos emphasizes Independence and connectivity now I will say there's a note here on the cosmos's tokenomics if you're buying it you better be staking it as well because it is currently inflationary and the current inflation rate also known as the staking reward rate is around 17 percent I'll also say the initial tokenomics don't look too bad around five percent was for a seed sale around seven percent for a strategic sale around 10 percent for the foundation another 10 for the tender company and the rest was raised through a public fundraiser basically meaning a token sale that raised around 16 million dollars in April of 2017. I will also say that Cosmos recently released a new white paper sporting something called Adam 2.0 that is supposed to address inflation as well but it would take another video to explain that so the problem of interoperability is one to be taken very seriously and may end up being the main feature that brings the rest of the wild west of crypto into a cohesive ecosystem that all works well together Cosmos definitely provides some unique insights and improvements that may be part of the eventual solution to our interoperability problem but Cosmos does have problems of its own like stake centralization for example however they are part of a growing group of innovators who are moving in an optimistic direction as I end this video I want to remind you that my D5 for beginner's guide is still completely free and you can access it at whiteboardcrypto.com simply by entering your email and joining my list where I also share behind the scene projects that I'm working on we weekly important crypto news and every now and then I also share my thoughts on topics that people ask about I highly recommend joining within the next month wink wink thanks for watching I hope you enjoyed this video I really hope you've learned something and most of all I hope to see you in our next video

Channel: Whiteboard Crypto

Views: 70,745

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Id: jj299iVoKwc

Length: 10min 24sec (624 seconds)

Published: Wed Oct 26 2022