Is Cosmos Worth Investing?
Blockchain networks usually operate independently and have no way of communicating with each other. As competition in the crypto-verse tightens, each network is trying to outsmart the other by introducing new features that can lure both investors and developers.
However, this kind of independent operation is more hurtful than helpful to the general cryptocurrency industry. While competition can help developers build better crypto products, there are several caveats to blockchains being siloed.
For instance, they are much harder to build, handle low transactions per second, have limited scalability and low usability. For these reasons, several technologies have been developed to make it easier for blockchains to communicate and work with each other seamlessly.
One of them is Cosmos.
Cosmos is a decentralized network made of several independent but parallel blockchains that are each powered by the Byzantine Fault-Torelance consensus algorithms. The network seeks to break barriers between blockchains and make it easier for developers to build them.
In this guide, we will look into more detail at what exactly Cosmos is, why it is central to blockchain interoperability and whether it is a good investment or not.
- What is Cosmos (ATOM)?
- How Does Cosmos Work?
- A Little Bit About ATOM Token
- Cosmos (ATOM) Price History
- Cosmos (ATOM) Price History 2021 - 2022
- How to Invest in Cosmos (ATOM)
- Is Cosmos A Good Investment?
- Conclusion: So, Should I Buy Cosmos (ATOM)
What is Cosmos (ATOM)?
Cosmos, usually referred to as the “internet of blockchains”, is a crypto project that is trying to create a network of blockchains that can seamlessly communicate with each other in a decentralized manner. The platform believes that this kind of interoperability will help independent blockchains process more transactions faster, become easily scalable, and increase their use cases while maintaining their sovereignty.
In other words, Cosmos is not trying to be unique by building its own parallel network to compete with the boatload of already existing ones. Instead, it wants to create an ecosystem of networks and make it easier for them to share data without relying on a central entity to facilitate this process.
Independent blockchains on the Cosmos network are called Zones. Each zone is tied to the central Cosmos Hub, which contains records of all the zones on its network.
Cosmos achieves blockchain interoperability using several open-source tools. These include:
- Tendermint Core: This is a consensus engine as well as a BFT consensus algorithm that is used as the base layer for blockchain development.
- Cosmos SDK: This is a modular framework that makes it easy for developers to build secure blockchain applications.
- Inter-Blockchain Communication (IBC): This is an interconnectivity layer that enables communication between the different blockchains on the Cosmos network.
Each of these tools is meant to facilitate easier and faster development of custom, interoperable, secure and scalable blockchain applications. In the next section, we will look at how these tools work to holistically achieve the Cosmos vision.
Cosmos is created by a Swiss non-profit known as The Interchain Foundation. The project was, however, originally founded in 2014 by two developers; Ethan Buchman and Jae Kwon. Back then, it was known as Tendermint, which is now the consensus algorithm that powers Cosmos.
The whitepaper for the project was later released in 2019, while the first ICO was held in 2017 by the Interchain Foundation, which raised more than $17 million, while Tendermint Inc. raised $9 million in series A funding in 2019.
Cosmos’ native token is known as ATOM. We will learn more about ATOM later in this guide.
Before that, let’s go into more detail about how exactly Cosmos works.
How Does Cosmos Work?
First of all, the Cosmos network has three important layers:
- The Application layer processes transactions and keeps a record of the overall state of the network.
- The Networking layer facilitates easy communication between blockchains and transactions.
- The consensus layer is where nodes communicate and agree on the current state of the Cosmos ecosystem.
Now, all three layers have to work synergically in order to allow developers to build better blockchain applications. To achieve this synergy, Cosmos relies on the open-source tools that we discussed above.
For instance, the Tendermint BFT engine makes it easy for developers to build blockchains without starting from scratch. This algorithm connects to individual applications via the Application Blockchain Interface protocol and is usually used by the Cosmos network to validate transactions and secure the network, among other functions.
As we mentioned above, each blockchain in the Cosmos network is known as a Zone. To be able to communicate with each other, the Zones are connected to the Cosmos Hub using the Inter-Blockchain Communicate (IBC) mechanism. This mechanism allows information to pass freely and securely between the zones connected to the Cosmos Hub.
Despite this interoperability, Zones can still perform their unique functions individually.
One thing developers love about Cosmos is that it tones down the complexity of building blockchain applications with its software development kit (SDK). The SDK offers functionalities that are common across blockchains ( such as tokens, staking, and governance) so that developers won’t have to build them from scratch.
To make their work even easier, developers can create and use plugins to add exciting features to their applications.
The Tendermint Core is the most important feature of the Cosmos network. This is a proof-of-stake (PoS) governance mechanism that makes it possible for all the distributed networks running the Cosmos to operate in sync.
Now, most of the operations running on Cosmos are centred around ATOM, the network's utility token.
Let’s talk more about Cosmos below.
A Little Bit About ATOM Token
There are currently 218,090,023 ATOM tokens in circulation, with a total supply of 275,874,627 tokens. At the time of writing this article, ATOM was trading at $11.71 with a market capitalization of $2.6 billion and a fully diluted market cap of $3.2 billion.
Like most of the other cryptocurrencies, ATOM was affected by the May 2021 crash, and the price dropped from its current all-time high of $32.14 to as low as $8.97.
While this is a big crash, it's not that bad considering that the token had humbling beginnings. With the current daily trading volume of more than $330 million, we can say that ATOM is poised for a promising trajectory ahead.
Unlike other coins like Bitcoin and ETH, ATOM is not mined. Instead, it is earned using a hybrid Proof-of-Stake (PoS) algorithm. Staking your tokens increases your chances to become a validator node. This allows you to validate transactions and earn some tokens while at it.
Alternatively, if you don’t want to become a validator node, you can delegate your tokens to another person then receive a portion of the rewards they get.
Staking your tokens also gives your voting powers depending on how many tokens you stake.
Currently, ATOM is supported on a variety of cryptocurrency exchanges. These include Binance, Kraken, OKEx, Bibox, BitForex and Dcoin. There are also trading pairs available such as ETH, BTC, USDT and fiat currencies like KRW and EUR.
Now, since it started trading in 2019, ATOM has changed a lot over time. To better get a glimpse of where the token has come, let’s quickly go through its price history.
Cosmos (ATOM) Price History
According to price data from CoinMarketCap, ATOM started trading in March 2019 with a price of about $7.5. This is a pretty high price compared to other coins that started below $1. In fact, according to the data, the token has never traded below $1 since it was launched.
On April 6th, 2019, Cosmos held an ICO and was able to raise $17.3 million worth of BTC, USD and ETH. During the ICO, about 75% of the circulating supply was sold to the general public. 5% was reserved for seed investors, while 10% was held by the Inter-Chain Foundation, which also helped in holding the ICO.
The ICO was largely responsible for the huge first-day price hike.
However, as is the case with most tokens that start trading at a high price, ATOM slumped within a few days and went to as low as $3.5. After that, it fluctuated between $3 and $6 until the end of May 2019.
Around mid-June, ATOM crossed $6 until the end of the month, when it went back to $5. The token then started on a gradual downtrend, and by September, it was trading at as low as $2. Afterwards, it bounced back and finished the year at slightly above $4.
The price rose slightly at the start of January 2020 but then started dropping in mid-February and went to as low as $1.8 in mid-March. There was a long consolidation mode from April to July, with the price mostly bouncing between $2 and $4
In August 2020, ATOM started rising dramatically and crossed $8 towards the end of the month. However, it started dropping again, and by the end of September, it was trading at slightly above $4. Between October and December, ATOM went into another consolidation period and traded between $4 and $7.
At the start of 2021, while the world economy was just recovering from the pangs of the coronavirus pandemic, a market-wide bull run started in the cryptocurrency market. Most crypto assets achieved new milestones, and ATOM wasn’t left behind.
The first major price jump happened between 25th January and 16th February when ATOM rose from $7.7 to $25.2, representing a more than 227% increase within a week. This parabolic rise was followed by a slight drop that saw ATOM trading below $20 by the end of February 2021.
There was some volatility in March and early April, with the coin fluctuating between $17 and 21. In mid-April, it went close to $28, then dropped again to below $20 by the end of April. This was then followed by another hike to over $32 on 8th May.
This is ATOM’s highest price.
From there, though, the token dipped to as low as $12 towards the end of May 2021. There was a market-wide crash around this time, and several cryptocurrencies lost most of their value. Although ATOM was able to recover to slightly above $1 at the start of June, it encountered a major resistance point as the bear market continued slumping prices across the crypto-verse.
By the end of June, ATOM was trading below $10.
It recently showed signs of a positive trajectory and was trading at close to $12 at the time of writing.
Cosmos (ATOM) Price History 2021 - 2022
As demand for Cosmos rose at the beginning of the year, the token saw a huge price hike that took it to over $30. However, the price has crashed severally in the last few months, with daily trading volumes declining each day.
The crash was partially inspired by the regulations and crypto crackdowns by the Chinese government. However, ATOM has recently adopted a bullish trend, and experts believe that a steady recovery might be in the offing.
Based on the predictions we have looked at for 2021 and 2022, Cosmos ATOM will likely keep rising, with some analysts predicting that it might end the year at over $20 per token.
For instance, after the recent rebound, Wallet Investor updated its predictions and now believes that Cosmos ATOM might be worth as much as $23.18 by the end of 2021. Wallet Investor’s predictions for this year start in August, where it expects the asset to trade at around $15.3 then grow steadily to $16 in mid-August.
It will then cross $17 in early October and continue with the uptrend until the end of the year, where it might trade at $19.6 or as high as $23.18.
Long Forecast is a bit less optimistic and doesn’t see much growth for ATOM until the end of the year. The site predicts that Cosmos will end July at slightly above $13 then cross to $14 in August. However, unlike Wallet Investor, Long Forecast foresees a drop from September, with the asset going as low as $10.5 in October. It might then rise slightly and finish the year at $12.7.
Trading Beasts’ predictions closely border bearish as it predicts that Cosmos ATOM might drop to $9.8 in August and September. The Cosmos token will then trade between $10 and $11 for the rest of the months, with a very subtle price change in between.
On the other hand, CoinPrice Forecast seems to agree with Long Forecast as it predicts that Cosmos might end 2021 at $12.21.
As you can see from these predictions, Cosmos might trade between $9 and $25 by the end of the year. The wide disparity between predictions is normal with any cryptocurrency asset and is usually due to the high volatility levels in the crypto market.
How to Invest in Cosmos (ATOM)
If you would like to learn how to implement each of these methods for the best returns, read ahead.
Method 1: HODLing Cosmos
Hodling is an informal derivation of holding, which simply means to buy a cryptocurrency asset and store it in a wallet for a long time without selling. Depending on how patient you are or simply how much profit you want, you can hold crypto for a few to several years.
The point of hodling is to wait until the price of the underlying asset is much more than the buying price. For instance, if you buy Cosmos now for the market price of $11, you can wait for five years when the price is, say, $110 per token (based on Wallet Investor predictions) before selling.
To give you a better perspective of how hodling works, let’s quickly look at the numbers.
Let’s say you are on a budget and you decide to buy ATOM tokens worth $2,000 for $11.5 each. That will be about 174 tokens. Now, if you wait for five years then sell for $110 each, you’ll make a whopping $19,140 without actively trading.
Now, to securely hold your ATOM tokens, you will need to transfer them to an off-exchange wallet. This is because default exchange wallets are online-based and vulnerable to hacking.
There are two common types of wallets you can use. These are:
- Hardware or cold wallets: These are usually offline based. They include hard disks which are not connected to the internet. This makes them less vulnerable to hacking compared to the other wallets.
- Software or hot wallets are online-based and can be accessed from anywhere using a password and username. As a result, they are more convenient than hardware wallets but more vulnerable to hacking.
Method 2: Trading Cosmos
Unlike HODLing, trading is much more complicated, and we only recommend it for people who have some experience. For holding, all you have to do is transfer your tokens into an off-exchange wallet then forget about them. However, with trading, you need to monitor several signals to know whether to place a long or short position.
Trading also allows you to profit from either price direction. That is, you earn whether the price goes up or down depending on the position you called. If you call a long position, you are predicting that the price will rise from a certain point, while a short position means that the price will fall.
If your prediction comes true, you make a profit. You can also amplify the potential gains of your trade using margin trading. This is where you trade with leverage to magnify your potential profit several times.
However, most trading experts don’t recommend leverage since they can magnify your losses if you make the wrong prediction.
Typically, going long means that you are buying the crypto asset, while going short means that you are selling. However, it is also possible to call a long or short position without actually owning the asset by using derivatives exchanges, CFDs, futures and other derivatives products.
There are several exchanges and trading platforms from where you can trade Cosmos ATOM. The trading platform you choose should be easy to use with low transactions fees and a variety of trading tools and tutorials at your disposal.
Read Also: Cryptocurrency Day Trading Strategies
Is Cosmos A Good Investment?
Although Cosmos suffered from the May price crash, price analysts are still positive that it is headed for a great future. From the predictions we have highlighted, you can see that while there are varying speculations, there is a good chance that we will be seeing a much higher price for Cosmos value by the end of the year.
Apart from the monetary value tied to its price, Cosmos’ underlying technology presents a massive profit potential for its investors. The protocol will be much more profitable as more blockchain developers see the need for streamlined application development.
For instance, developers using the Cosmos technology don’t have to start creating applications from scratch. Instead, they use pre-made functions, which makes it faster and easier to create blockchain applications.
One of the reasons why Cosmos is a good investment is because it stands out from the other platforms offering the same solution for cryptographers. The network offers fast transaction speeds, has good security measures, is easily scalable and is designed for mass adoption.
The low circulating supply also makes Cosmos a solid investment with potentially huge profits in the future. This is because the low supply makes it scarce, and with time the demand will be more than supply causing the price to rise parabolically.
Finally, Cosmos is supported by several major exchanges and trading platforms. This exposes it to more investors, which increase its daily trading volumes and subsequently boost its growth.
Check Out: Pros And Cons Of Investing In Cosmos (ATOM)
Conclusion: So, Should I Buy Cosmos (ATOM)
ATOM is currently trading at slightly above $11, which is much lower than most of the other cryptocurrencies. So, if you believe it is the right addition to your portfolio, now would be a great time to buy it.
However, there are several things you will need to factor in before buying the Cosmos token. First of all, you need to consider its future potential. Do you believe that Cosmos’ technology will be any good in the future, and can it withstand such close competitors as Polygon?
You also need to consider your risk tolerance. How much are you willing to bet on Cosmos? Usually, we don’t recommend investing more than you can afford to lose. Cryptocurrencies are very volatile, and you can lose all your money if the market crashes. So, you should always be careful with how much money you put into the investment.
Finally, make sure that you do your own research and make your own decisions. While we put plenty of time into analyzing the investment potential of cryptocurrency assets for you, you shouldn’t take our word for it. Instead, do your own research, monitor the market and be absolutely sure that you are ready to invest.
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