The Road To Blockchain Interoperability: Why Cosmos Might Be The Best Solution and Potential Greatness for ATOM

The internet of value is gradually evolving into an ecosystem that consists of multiple blockchain projects but it would generate more value if it could operate as one. The idea of blockchain interoperability seeks to exploit the untapped potential that can be derived when value is transferred from one blockchain to another.

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A good example is a situation where a company with a private blockchain connects to a public blockchain like the Ethereum network for partnerships, transactions, and development. Fortunately, some projects focus on facilitating cross-chain interoperability. One such project is Cosmos which was developed by Tendermint Inc, a company founded by Computer Scientist Jay Kwon in 2014. Kwon is also the founder of the Swiss-based Interchain foundation which held the ICO of ATOM coin, the native cryptocurrency on Cosmos.

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While other similar projects develop bridges for connecting to the different blockchains, Cosmos takes a different approach by developing hubs that other blockchains can connect to. A hub can connect thousands of different blockchains and one major advantage is that it does not require each blockchain to spend a lot of money to connect to every other blockchain that it wants to work with.

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Cosmos uses a unique proof of stake mechanism called Tendermint which provides scalable and highly secure blockchains. They can process more than 10,000 transactions per second and the blockchains can be developed in a matter of weeks rather than years.

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The recently released Cosmos Inter-blockchain Communications protocol is one of the most important developments in the cryptocurrency space. This is because it not only connects proof of stake blockchains but also proof of work blockchains albeit using a different approach between the two. This interoperability will introduce the ability to trade Bitcoin, Litecoin, BNB, Bitcoin Cash, and Ethereum without wrapping thanks to the Cosmos IBC.

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The Thorswap decentralized exchange is the first decentralized multichain exchange. Interestingly, Thorchain is a blockchain that was developed using Tendermint. ATOM is used to pay for the transaction fees, governance, and staking. COSMOS has been gaining a lot of traction especially in India which is responsible for a substantial amount of ATOM trading volume. Even Grayscale, the company that has been heavily investing in cryptocurrencies filed for an ATOM trust this year.

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ATOM price analysis

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ATOM is currently trading at $10.27 after tanking from its all-time high of $32.32 in May. Its bearish performance in the last few weeks aligns with the overall crypto market correction. Interestingly, its current price is double its price at the start of 2020.

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There are currently 210 million ATOM coins in circulation and its market cap is currently at $2.17 billion. An increase in demand for the cryptocurrency can potentially lead to better price performance. Fortunately, Cosmos has been working on developments that will generate more utility for the token. Some of those developments include the Gravity DEX which will facilitate DeFi on Cosmos. ATOM holders can participate by providing liquidity on the network, allowing them to earn interest.

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The Gravity Bridge is another major development designed to introduce a peg zone on the Cosmos hub, facilitating the transfer of tokens between the Cosmos network and Ethereum. Cosmos developers plan to roll out interchain staking by the end of 2021, allowing Cosmos validators to provide security for multiple blockchains on a pay-as-you-go basis.

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Cosmos’ roadmap highlights a pipeline project that will introduce staking derivatives on its network in 2022. This development will enable ATOM burning in the event of slashed collateral. Cosmos is currently working towards getting as many blockchains as possible to link to its network. The fulfillment of this objective will have a positive impact on ATOM's price action.

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