Cosmos’s (ATOM) value has recently risen to new highs.
This cryptocurrency began the year at a price of $6.49 and is now worth $40.64 at the time of writing, representing a 525 percent increase. Much of this can be attributed to a strong September run. Cosmos’ value more than doubled in less than two weeks, reaching a high of $44.70.
As a result, Cosmos outperformed the crypto market in 2021 as a result of these price moves. Let’s take a look at what Cosmo does, and its future potential is to see if it’s a worthwhile investment right now.
What exactly is Cosmos?
Cosmos is a decentralized app (dApp) and service ecosystem. Its main goal is to link several blockchains so that they can all work together.
The fact that several cryptocurrencies have their own blockchain networks but that these blockchains run independently is now a problem. They are unable to communicate with one another, resulting in the fragmentation of the industry.
Cosmos has a number of open-source tools on its network to aid in the interoperability of blockchains. These are some of them:
Cosmos Hub: The Cosmos network’s first blockchain and the basis The Cosmos Hub connects all of the blockchains on Cosmos.
Inter-Blockchain Communication Protocol: A mechanism for data sharing between separate blockchains. This protocol allows blockchains that support it to communicate with one another.
Terndermint: On Cosmos, a piece of software that makes it easier for developers to establish their own blockchains, known as zones. These blockchains can then connect to the Cosmos Hub’s other blockchains.
Cosmos software development kit (SDK): A framework for creating blockchains based on Tendermint
This isn’t merely a project with big intentions for the future. Cosmos’ technology has already proven to be effective. Binance Smart Chain and Terra are two high-profile examples of Cosmos SDK-based projects. There are now 255 apps and services in use in the Cosmos ecosystem.
How the Cosmos cryptocurrency works
Cosmos is a cryptocurrency that works on the principle of proof-of-stake. Once you have them, you can stake your ATOM tokens, which means you pledge them to support the network. Staked tokens are used to validate transactions, and you get rewarded with extra ATOM as a result.
Your tokens are safe, and you can unstake them later if you want to swap them. As a result, staking crypto has become a popular method for investors to increase their crypto holdings.
Cosmos’ transaction fees are paid in ATOM in some cases, but not all. There are blockchains built on Cosmos that charge fees with their own coins. In the case of the Binance Smart Chain, which is based on Cosmos, fees are paid in Binance Coin, the company’s own cryptocurrency (BNB).
Should you buy Cosmos?
Cosmos is a project with a clear use case and a lot of room for development. At the same time, it isn’t the only company focusing on interoperability, so it’s natural to question if a price drop is on the way.
Polkadot (DOT), another cryptocurrency that allows blockchains to communicate with one another, is Cosmos’ largest rival. It currently has a market capitalization of almost $29 billion, compared to nearly $9 billion for Cosmos. If Cosmos piqued your interest, check out Polkadot to see how the two stack up.
Given how high the price of Cosmos has risen in recent months, it may have already reached its peak. This isn’t a major problem if you’re interested in long-term investing and intend to keep your crypto for several years. Just bear in mind that you may not get immediate effects. Cryptocurrency investments include a high level of risk, so only invest what you can afford to lose.
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