What is Cosmos ATOM Crypto?
The cryptocurrency market continues to see volatility going into 2023, which naturally comes as no surprise.
While there are seemingly endless new cryptocurrencies coming into existence, what is Cosmos ATOM crypto?
Like Ethereum, Cosmos ATOM is a blockchain platform developed to provide scalability and interoperability to dApps (decentralized applications).
Sounds interesting? Let’s go into more detail about what is Cosmos ATOM, the use cases, advantages and disadvantages while reviewing the options of how to trade the Cosmos ATOM crypto CFD.
Table of Contents
What is Cosmos ATOM Crypto? An Introduction
Cosmos ATOM was created by a blockchain development company named Tendermint Inc. The coin was officially launched in 2019.
Cosmos ATOM describes itself as an ecosystem of independent interconnected blockchains. As of 2023, the Cosmos ecosystem is known to have 274 apps on its platform.
Some of these apps include Crypto.org, Binance Chain, and Terra. Cosmos also claims to have around $61 billion of digital assets under management.
Cosmos ATOM allows developers to make their own autonomous blockchains. This is useful because developers can define their own rules and avoid network congestion and high transaction fees on another entity’s blockchain.
Developers also don’t have to be tied to the smart contract system that other blockchain platforms seem to offer.
So, instead of multiple blockchains competing for resources on a single layer, Cosmos allows multiple blockchains to co-exist and be interconnected.
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The Cosmos Hub and ATOM
The first blockchain to launch on the Cosmos network was the Cosmos Hub. The word hub is important because the Cosmos Hub serves as the main connecting hub for all other blockchains built on the Cosmos network.
Various blockchains are connected to each other via the inter-blockchain communication protocol or the IBC. The Cosmos Hub acts as a service provider to all the various blockchains built on the Cosmos platform.
The vision behind the Cosmos hub is to create a decentralized marketplace offering a host of products and services. The Cosmos hub also offers a bridge to Ethereum and Bitcoin.
The native token of the Cosmos ecosystem is the ATOM. It is used for staking purposes, general governance, and the payment of transaction fees.
Those who hold ATOM tokens can also participate in key decisions related to governance, proposals on changes to the Cosmos network’s functioning, and other key topics like block rewards.
In order to have a better idea of how the Daily price of ATOMUSD fluctuates, see below the chart provided by the TradingView widget:
*Past performance is not representative of future results.
What are the Use Cases of ATOM?
The ATOM token can be used for various purposes.
Staking: Firstly, holders of ATOM tokens can stake their coins to participate in the block validation process. Participants can earn rewards for doing so.
Stake validators are chosen to participate in the block validation process based on how many ATOM tokens they hold and how good their reputation is on the Cosmos network.
Transaction Fees: The various functions (transactions) performed on the Cosmos network require fees. These fee payments can be made using ATOM tokens. Such fee payments also incentivize the validators to stake their holdings and perform the transactions.
Governance: As mentioned above, ATOM token holders can vote on key proposals regarding the Cosmos network. They can propose changes and be part of a decentralized decision-making process.
Trading: Traders can take advantage of the price volatility and execute long or short trading strategies. At Admirals, we only offer Contracts for Difference (CFDs) on cryptocurrencies.
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Advantages and Disadvantages of Cosmos ATOM
As this any cryptocurrency or traditional currency, digital or otherwise, each comes with its own advantages and disadvantages. We will list these, below:
Advantages of Cosmos ATOM Crypto:
The Cosmos ATOM has some important advantages that make it a useful technological innovation.
Scalability: The first and most visible advantage is scalability.
Unlike Ethereum, the Cosmos network is built to power multiple blockchains on its network. Thus, there is no situation where multiple blockchains compete for throughput.
Flexibility: The various blockchains built on the Cosmos network can also communicate with each other, giving flexibility to the value proposition that developers seek to offer through their dApps.
The interoperability also allows for the exchange of assets and information between two blockchains without the requirement of an intermediary
Energy Consumption: Cosmos ATOM uses a proof-of-stake consensus mechanism as opposed to a proof-of-work mechanism. This difference leads to significantly lower energy consumption when validating transactions and securing the Cosmos network.
Disadvantages of Cosmos ATOM Crypto:
As with all advantages, we will cover some of the disadvantages of the Cosmos ATOM crypto, below:
Potential Centralization: Cosmos ATOM is not without its weaknesses. The biggest one is its proof-of-stake mechanism. While the structure reduces energy consumption, it can also lead to centralization.
The decision-making can be potentially dominated by a handful of members who hold a significant number of ATOM tokens.
Steep Learning Curve: Secondly, the Cosmos ecosystem is quite complex and developers can face a steep learning curve when trying to build something on the Cosmos platform.
Competition: Thirdly, Cosmos faces fierce competition from the likes of Polkadot and Avalanche which offer similar features to the Cosmos platform.
What is Cosmos ATOM Crypto? Conclusion
You should now be able to carefully weigh the advantages and disadvantages of Cosmos ATOM. We hope that you have a better understanding of what the ATOM token is, how the Cosmos system is structured, and what its value proposition is.
If you are planning to trade the ATOM cryptocurrency, then Admirals offers an ATOM USD CFD. As with any CFD, you can trade on both price directions (Up or Down, Buy or Sell).
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