In this guide, we will voice our own and market’s opinion on Cosmos future while discussing ATOM price forecast for 2021 and beyond.
Please bear in mind that you should take this and any other prediction with a grain of salt since predicting anything is a thankless task, let alone predicting the future of a novel, highly volatile financial asset like Cosmos.
Now, let’s head into it.
Before we delve deep into the Iota price prediction and answer questions if Cosmos is a good investment or not, why will Cosmos succeed or fail or why will Elrond price rise or drop, let’s quickly throw a glance at what is Cosmos and its to date history.
What is Cosmos
Cosmos markets itself as a decentralized network of independent parallel blockchains which are powered by Byzantine Fault Tolerant consensus algorithms like Tendermint. Byzantine Fault Tolerance is a feature of one blockchain’s consensus algorithm which makes it able to achieve consensus in a decentralized environment that could potentially contain malicious consensus verifying nodes in it.
These blockchains are capable of interoperating with eachother through the Cosmos Network, the so-called “Internet of Blockchains”. Also referred to as Cosmos Hub, it is the first blockchain launched within the Cosmos Network and its main task will be to interlink other blockchains (also known as zones) in the ecosystem. Tokens can be transferred from one zone to another securely and quickly with the help of Cosmos Hub.
Cosmos Network will be built on top of three key parts:
- Tendermint Core – Connects the networking and the consensus layer of the protocol under a software implementation known as Tendermint Core. Contains the Tendermint BFT consensus algorithm and the IBC (interblockchain communication) protocol for hub/zone communication.
- Application Blockchain Interface (ABCI) – BFT replication of dapps in multiple programming languages. ABCI is language-agnostic and enables developers to build the application portion of their blockchain in any language. Is the connecting interface between Tendermint Core and Cosmos SDK.
- Cosmos SDK – Development resource also known as “Base Coin”. The primary purpose of the SDK is to reduce the complexities in building the ABCI for common blockchain functionality and allowing developers to focus on customizable applications within a standardized framework. Developers can take this basic frame that has built-in tokens, governance, staking – all the basic features required of a blockchain – and then add desired functionalities through plugins. Basically the application layer of Cosmos Network.
Tendermint Core is responsible for the consensus on the Cosmos Hub. Blockchains that are connected to the Hub maintain their own consensus sovereignty, without having to switch to Tendermint.
Developers can build their own blockchains and applications with the help of Cosmos SDK and run them on top of the Tendermint Core, only worrying about the application layer. ABCI uses a socket protocol to enable the consensus engine to manage application state running in another consensus process, making Cosmos able to support a wide variety of cryptocurrencies and scripting languages like those found in Bitcoin, Ethereum, ZeroCash, CryptoNote, and more.
About the Tendermint Algorithm
Tendermint, the underlying algorithm of Cosmos, is the first adaptation of Proof-of-Stake consensus derived from the Practical Byzantine Fault Tolerant (PBFT) algorithm introduced by Castro and Liskov in 1999, after a 30 year long research period. BFT-based PoS protocols pseudo-randomly assign a validator the right to propose new blocks during a multi-round voting process.
However, committing and finalizing blocks depends on a supermajority — in this case two thirds of the quorum — of all validators signing off on the proposed block. This may take several rounds, or polkas, before blocks become finalized. BFT systems can only tolerate up to a ⅓ of failures, where failures can include arbitrary or malicious behavior.
Some of the features of this algorithm:
- Provable liveness in partially synchronous network.
- Safety threshold: ⅓ of validators.
- Public/private chain compatible.
- Instant finality: 1–3 seconds depending on number of validators.
- Consensus safety.
Cosmos’s proof of stake algorithm is a delegated one, meaning that it is organized in such a manner where stakers are split into two groups: validators and delegators. Delegators have the task of deciding which validators will get to take a part in the consensus; validators are there to be a part of the consensus, validate transactions and add new blocks to the chain.
The rewards these stakers gain are generally earned in the ATOM token but in future may also be earned in wrapped forms of alternative cryptocurrencies such as Bitcoin and Ethereum. If one of the nodes in this system starts operating in a malicious manner, it gets “slashed” from the network and its tokens are taken away.
Cosmos Price Prediction 2021
Many investors (traditional and crypto) will tell you that fundamentals are extremely important and should carry the most weight when you assess a project. We agree with this claim, to an extent.
Crypto is specific in a sense that fundamentals are hard to rely on. How come?
Well, most of the crypto investors are not technologically refined to understand if it is even feasible to do what the project claims to be doing. This leads to exaggerated and unsubstantiated roadmaps by many crypto project teams. These roadmaps sound terrific and people flock to invest in the project even though, with a little technical or economical knowledge, they would have seen how ridiculous some of those ideas are.
⚡️ Use case
For this reason, it is always good to check the feasibility of the use case by consulting someone more technically astute.
For example, a lot of these projects noticed the transaction speed issue with Bitcoin so they went all-in with how fast their blockchains are. But that speed came at a cost of decentralization. Essentially, they claimed to have solved a blockchain trilemma, which bugged geniuses for centuries. But some twenty-something no-names solved it in a week or so.
Not a very original use case. Just another smart contracts platform that aims to be faster and more efficient than Ethereum. Making ground on ETH will be a steep hill to climb. However, Cosmos did manage to separate itself from the rest of the Ethereum-chasers pack and join Polkadot in a bid to be the most serious contender for the smart contracts and DeFi crown.
Delays have continued to weigh on Ethereum which keeps giving a striking chance to its competitors like Polkadot, Cosmos, NEO, Cardano and many others.
Main advantage of Cosmos over Ethereum and other competitors is its superior design, from the getgo. Here are some of the highlights of Cosmos Network design:
The vision of Cosmos is to have thousands of Zones and Hubs that are Interoperable through the Inter-Blockchain Communication Protocol (IBC). Cosmos can also connect to other systems through peg zones, which are specifically designed zones that each are custom made to interact with another ecosystem such as Ethereum and Bitcoin. Cosmos does not use Sharding with each Zone and Hub being sovereign with their own validator set.
Each Zone and Hub in Cosmos is capable of up to around 1000 transactions per second with bandwidth being the bottleneck in consensus. Cosmos aims to have thousands of Zones and Hubs all connected through IBC. There is no limit on the number of Zones / Hubs that can be created.
Tendermint consensus is limited to around 200 validators before performance starts to degrade. Whilst there is the Cosmos Hub it is one of many hubs in the network and there is no central hub or limit on the number of zones / hubs that can be created.
Tendermint consensus used in Cosmos reaches finality within 6 seconds. Cosmos consists of many Zones and Hubs that connect to each other. Communication between 2 zones could pass through many hubs along the way, thus also can contribute to latency times depending on the path taken as explained in part two of the articles on Cosmos. It doesn’t need to wait for an extended period of time with the risk of rollbacks.
There are currently around 50 projects building on the Cosmos SDK with a full list can be seen here and filtering for Cosmos SDK . Not all of the projects will necessarily connect using native cosmos sdk and IBC and some have forked parts of the Cosmos SDK and utilise the tendermint consensus such as Binance Chain but have said they will connect in the future.
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Assessing the team behind the project is another point that needs to be addressed. More often than not, those people will be the only source of their claims (and doctored LinkedIn profiles). So, even though this is an important criterion, bear in mind that a cunning team of marketers can fake legitimacy.
One huge RED FLAG about a team is tweeting, posting, blogging about the price of their token. No legitimate team does that as they have smarter things to do – like work on a multi-million dollar project of theirs. Only money grabbers run their official social media and blogs as the most blatant market manipulators (example: Justin Sun) to run the price up before they dump their mountains of coins they created out of nothing and awarded to themselves.
Such teams usually pay off low-tier crypto media publications to post “unbiased” articles and reviews of their projects in an attempt to create an illusion of a widely respected and attractive project.
Very transparent and professional. No price action shilling or commenting, focused on building.
However, the initial team did break up but the project did not fade away and the split was pretty civil. All of the former members actually stayed active and work on developing different parts of the network to this day.
Founder Jae Kwon accused early contributor Zaki Manian of blasphemy, arguing over whether this software was “godly” and demanding that Manian renounce his “self-professed godliness.”
Kwon continues to spearhead Tendermint’s work on software development, as does Manian’s startup, Iqlusion, and a few other companies like Althea and Chainsafe. Plus, the non-profit created a startup in Berlin, Interchain GmbH, now staffed by former Tendermint technologists working on the same goals as 2019.
Community – pay special attention to this one. Size of the community is not relevant as it can easily be faked (just check Fiverr or Upwork to see how easy is to buy 100k of Twitter followers or subreddit subscribers).
What is more important is the content those community members post – does it look real? Is it only price-centered? It it allowed to exercise some critical thinking or the only posts allowed are shills and cult-like idolizing of the team (most often the team leader gets a rockstar status among the sheepish investors).
Very active subreddit with almost 20k subscribers and a pretty active Telegram group along with a dedicated forum. Seems to be genuine and authentic, no bots, no low-quality posting about moons and price action.
⚡️ Exchanges and wallet support
Another good indicator of how serious is the project taken by other crypto agents. Some smaller and marginal exchanges and wallets can be paid off for listings but larger platforms like Kraken, Binance or Coinbase lend legitimacy to a project that is listed there. So, that is a great cue if the project is actually worth something among its peers.
Very good support among the popular exchanges (Binance, Bitfinex, Kraken, Kucoin etc) and wallets (Atomic Wallet, Trust Wallet, Guarda etc.).
Sometimes the project makes sense and everything sounds right except of the token role. It is just superfluous and forced into the picture (so the team can take the money and get rich). Aside of the logic behind the token, you should pay attention to its current and overall supply. Also, inflation and new coins production rate is extremely important. Distribution among the team, early investors and regular users is also of immense consequence. Check Ripple and XRP to see how hard is to have organic price growth when there is a whole slew of people who dump millions of new (unlocked) tokens into the market each week.
It is important that tokens are woven into the project with clever incentives in mind. It is all about incentives in the world of crypto – why should the buyer hold some coin, what is in it for him? Different projects use different methods to entice people to buy and hold their coin.
Official token of the Cosmos ecosystem is called ATOM. 168 million tokens were sold in a 2017 ICO, during which the project collected $17,300,000 in 28 minutes (thus completing 100% of its initial sale goal). The team held 50 million ATOMs for themselves to be used for funding and strategic partnerships.
ATOM isn’t a fixed capped supply token and supply will continuously increase with yearly inflation of around 10% depending on the % staked. The current market cap for ATOM as of the time of this writing is $1 Billion with 203 million circulating supply. Rewards can be earnt through staking to offset the dilution caused by inflation. Delegators can also get slashed and lose a portion of their ATOM should the validator misbehave.
The ATOM token is the native token for the Cosmos Hub. It is commonly mistaken by people that think it’s the token used throughout the cosmos ecosystem, whereas it’s just used for one of many hubs in Cosmos, each with their own token. Currently ATOM has little utility as IBC isn’t released and has no connections to other zones / hubs. Once IBC is released zones may prefer to connect to a different hub instead and so ATOM is not used.
Cosmos’s ATOM token is only for the Cosmos Hub, of which there will be many hubs in the ecosystem and has very little utility currently. (this may improve once IBC is released and if Cosmos hub actually becomes the hub that people want to connect to and not something like Binance instead.
⚡️ Trading volume
Trading volume is another excellent barometer of the quality of the assets. This can also be faked by automatic and wash trading on small exchanges but, just filter those out and see if there is actual liquidity on the bigger platforms.
Excellent and consistent trading volume in the last 3 months with ocassional spikes and drops. It moves in the range between $0.5 to $3 billion per day which is on par with its nearby ranked coins and direct competitors (like AVAX or DOT). The 24h trading volume hasn’t dropped below $0.5 billion in the whole 2021.
Now, we’re talking about the really impactful market forces.
Unfortunately, the power of social media, especially Twitter, Discord, and Telegram groups and to a smaller extent subreddits and Facebook groups, often outweighs the fundamentals of a crypto project. As a consequence, we see trash and half-dead zombie projects like Dogecoin, Electroneum, Verge, Tron (not dead but everything is faked around it, from the number of users and dapps to the unoriginal and uninspiring, incompetent leadership) and similar shitcoins rising up in the market cap rankings, sometimes even entering the top 10.
The speculative wave can lift you into the skies but can, more often, smash your portfolio into a big zilch.
Some people are good at swimming with these sharks (Twitter personas hidden behind some lame nicknames like Crypto [INSERT ANIMAL) or Crypto [INSERT VERB]) that coordinate their shilling and price pumps and dumps. However, ordinary crypto buyers have no time or skills to keep up with them and are used as a plankton – food for the bigger crypto sea creatures to feast on.
Nevertheless, social media can be a place you run into some good tips about hidden gems. When you read something that sparks your interest, don’t get overexcited and invest right away. Instead, put it on a watchlist and check all of the stuff we mentioned above.
The key thing to look for is authenticity – does the community, social media posts of crypto personas, articles about the project on crypto media look legit? Is it posted by the well respected people with a strong reputation or by no-names who shill coins left and right? Is the community aware of potential flaws of the chosen project and is it allowed to discuss them? Are there systemic complaints of sudden bans and censorship by the community moderators?
A good project is not that hard to recognize and once you see posts about it by other people – check their profiles, check their tweet/post history, see if the recommendation comes across as a genuine suggestion or an artificial shill made out of self-interest?
Cosmos is highly regarded in the crypto industry. There is a lot of attention paid to its updates, all of it seems genuine, authentic, and not paid for.
Cosmos Price Prediction – summed up
Cosmos is competing not only against ETH but against others as well, most notably Polkadot and Avalanche.
Polkadot is a thriving construction site and is seeing the best adoption among project builders, but Cosmos is not too far behind.
Cosmos Network is not a paper tiger as there are a host of fairly known projects being built on it, such as:
Stablecoins: Kava, Terra
Credit markets: Kava, Anchor (Terra)
Oracles: Band, Chainlink (it is blockchain agnostic oracle solution)
Synthetic assets: Kava
Having analyzed all of the above on Cosmos, we can say that this is a legit project with a unique chance to actually be the project that will overcome the daunting task in front of it – outcompeting Ethereum to be crowned as the king of smart contract platforms. It enjoys a good standing in the crypto circles and could be a worthy investment in the short and long-term.
Where and how to buy ATOM
This is how you can buy Cosmos (ATOM):
- Download a Cosmos Wallet (Parity Signer, Atomic Wallet, Guarda, Trust Wallet usw)
- Create your ATOM-Adress
- Find an exchange that lists ATOM (Binance, Kraken, Kucoin) and buy ATOM
- Transfer ATOM from the exchange to your wallet
If you are not happy with Binance or can’t use it for some reason, here are a couple of alternatives:
Cex.io lot of payment methods
That is how you buy Cosmos, in a nutshell.
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Measure in Satoshis
You will always want to know if the effort of trading was worth it as opposed to just hodling BTC. You should also account for the time you spent trading as that time also has value.
For example, if you spent 15 hours trading altcoins and you ended up having the same amount of Satoshis, it means you have wasted those 15 hours and would have been better off if you simply held BTC.
Since Bitcoin sits in between the Fiat and Alt Coin sandwich, you should only ever trade in BTC value.
If I invest in an altcoin at .17 cents at 10k Sats and in 6 months, I cash out at .93 cents at 10k Sats. Did I make money in that altcoin?
The answer is no. Your opportunity cost was equal to holding bitcoin since the sat values didn’t move, the price of BTC going up is what netted you your increase in fiat. Not the increase of sats on STEEM.
If, however, you cashed out of STEEM at 20k sats at .93 cents over the course of 6 months, that means you made a profit in satoshi value as well as USD value (through bitcoin).
Constructing a Investment Strategy
I can’t stress enough how important it is to construct an actual investment strategy. Organize what your goals are, what your risk tolerance is and how you plan to construct a portfolio to achieve those goals rather than just chasing the flavor of the week.
Why? Because it will force you to slow down and make decisions based on rational thinking rather than emotion, and will also inevitably lead you to think long term.
Setting ROI targets
Bluntly put, a lot of young investors who are in crypto have really unrealistic expectations about returns and risk.
A lot of them have never invested in any other type of financial asset, and hence many seem to consider a 10% ROI in a month to be unexciting, even though that is roughly what they should be aiming for.
I see a ton of people making their decisions with the expectation to double their money every month. This has lead a worrying amount of newbies putting in way too much money way too quickly into anything on the front page of CoinMarketCap with a low dollar value per coin hoping that crypto get them out of their debt or a life of drudgery in a cubicle. And all in the next year or two!
Keep in mind that a 10% monthly increase when compounded equals a 313% annual return, or over 3x your money. That may not sound exciting to those who entered recently and saw their money go 20x in a month on something like Aave before it crashed back down.
- Elrond price prediction
- Avalanche price prediction
- Polkadot price prediction
- Aave price prediction
- Tron price prediction
- Cardano price prediction
- Ethereum price prediction
Summing it all up
Consider the individual risk of each crypto and start looking for red flags:
- guaranteed promises of large returns (protip: that’s a Ponzi)
- float allocations that give way too much to the founder
- vague whitepapers
- vague timelines
- no clear use case
- Github with no useful code and sparse activity
- a team that is difficult to find information on or even worse anonymous
While all cryptocurrencies are a risky investments but generally you can break down cryptos into “low” risk core, medium risk speculative and high risk speculative
- Low Risk Core – This is the exchange pairing cryptos and those that are well established. These are almost sure to be around in 5 years, and will recover after any bear market. Bitcoin, Litecoin and Ethereum are in this class of risk, and I would also argue Monero. Allocate most of your funds into this basket.
- Medium Risk Speculative – These would be cryptos which generally have at least some product and are reasonably established, but higher risk than Core. Things like Stellar, Cardano, BNB, NEO..etc.
- High Risk Speculative – This is anything created within the last few years, low caps, shillcoins, DeFi…etc. Most cryptos are in this category, most of them will be essentially worthless in 5 years. Invest a very small portion of your funds and only what you can afford to lose (and I truly mean it because there is a big chance you will lose it all).
CaptainAltcoin's writers and guest post authors may or may not have a vested interest in any of the mentioned projects and businesses. None of the content on CaptainAltcoin is investment advice nor is it a replacement for advice from a certified financial planner. The views expressed in this article are those of the author and do not necessarily reflect the official policy or position of CaptainAltcoin.com