While managing cryptocurrencies, you may have heard the term “interoperability”, which has become a popular term in the cryptocurrency space. Simply put, anyone interested in interoperability is secretly looking for new ways to utilize their tokens and digital assets, and two interesting platforms that make this possible are Polkadot and Cosmos.
On the surface, these two multi-chain networks may seem somewhat identical. After all, both were designed to allow individual blockchains to “operate” with each other, something that has not been possible for a long time.
But upon closer inspection, it’s clear that these two are made for different types of cryptocurrency users. So, why not analyze each of them to see what they have to offer and decide if one of them can help you take the next step? One step in your cryptocurrency journey.
What is Polkadot (DOT)?
In 2016, Ethereum co-founder Gavin Wood left the company to pursue new projects that he believed could be more ambitious in infrastructure. This would eventually become known as Polkadot, and was built by Gavin with help from the Web3 Foundation.
The entire purpose of Polkadot is to bring together individual blockchain networks such as BTC and ETH to share data with each other and process transactions.
Think of your network like a t-shirt. Added to this, the blockchain is like an individual polka dot, and although separate, it is part of one larger network that helps manage it and keep everything running smoothly.
How does Polkadot work?
So what makes Polkadot so special that blockchains can communicate with each other? It all comes down to a parachain, a custom bridge that carries information between blockchains and is all connected to a relay chain.
Think of the relay chain as the central hub of Polkadot. It runs everything in the background and is the central management authority for the entire network. All parachains on Polkadot rely on relay chains to function, but the parachains themselves still operate on their own, so it’s like having multiple workshops all operating in the same town square.
What is Cosmos (ATOM)?
After the rapid emergence of Bitcoin competitors in the early 2010s, software architects Jae Kwon and Ethan Buchman had the bright idea of creating a multi-chain service that would allow all of these networks to communicate.
The result is Cosmos, an interconnected blockchain network purpose-built, designed, and managed by the network’s developers.
How does Cosmos work?
Cosmos has been nicknamed the “Internet of Blockchains,” or Interchain for short, because it brings together multiple chains into one network while giving them complete freedom and individuality. In some ways, Cosmos is like the Internet and blockchain is like a website. They’re all on the same page, but they do completely different things and have their own set of rules.
Similar to Polkadot’s relay chain, Cosmos has a central component called the Cosmos Hub, but the difference is that it does not provide governance for all blockchains (realms) in Cosmos.
Cosmos therefore allows blockchains to come together to form their own domains, but without burdening them with requirements or rules and allowing them to operate on their own terms rather than as part of a larger community.
Do Polkadot and Cosmos Share Similarities?
Polkadot and Cosmos are working toward the same goal. It gives investors and developers greater freedom by freeing them from the constraints of everyday blockchain.
Blockchain has always been known for being siled, but being able to share and borrow data across multiple places means developers can create truly ambitious projects and investors can use cryptocurrencies in ways never before possible.
Both have gained significant popularity and recognition since their release. Polkadot is still receiving frequent upgrades to this day, and Cosmos is used by many large developers, including Binance Chain, which was created using the Cosmos network.
Polkadots and Cosmos: Key Differences
Polkadot and Cosmos may seem the same, but if this were true there would be no need for the two to exist at the same time, so why are they actually so different?
infrastructure
We already know about the basic multichain functionality of the Polkadot and Cosmos ecosystems, but let’s take a closer look at the infrastructure to understand the differences between the two.
Polkadot uses parachains to allow blockchains to communicate with other blockchains, while Cosmos does this through the Inter-Blockchain Communication Protocol (IBC), which provides blockchain interoperability.
Both contain a relay chain and a central hub in the form of a Cosmos Hub, but the important thing to keep in mind is that the latter does not tie everything together and manage it as one. People will use Cosmos as a platform to connect blockchains and build new projects, but once this is done, the network will not impose any rules on the chain and will allow the chain to be free to do whatever it wants.
Polkadot, on the other hand, does not grant much freedom because it is always interconnected and bound by rules. For example, smart contracts can be built on Cosmos’ blockchain through an integration program called CosmWasm, but Polkadot currently only supports select view parachains.
Think of it this way. In the Polkadot network, reconfiguring one parachain would require them all to be reconfigured because they must be connected to each other, but this does not happen in Cosmos because they are all truly independent blockchains.
No ecosystem is objectively better than another. They are just built for their own specific purposes. Polkadot prioritizes accessibility, while Cosmos is more complex but offers greater freedom.
security
This is the biggest difference between the two, but the easiest way to understand it is to start with validators, the individuals responsible for verifying transactions on the network.
Polkadot’s validators are appointed by DOT holders as part of a designated Proof of Stake (PoS) model and operate across the entire network and across all chains.
This is what it means for the Polkadot ecosystem to have open source shared security. This means that the security of the entire network is distributed and shared across all chains because they are all registered in the relay chain.
Cosmos validators, on the other hand, are first and foremost dedicated to one individual chain or zone, but there is an opportunity for users to sign up for the platform’s latest interchain security, which operates identically to shared security.
But to get it, Cosmos users must first send a governance proposal that ensures that the chain can support it economically. That means it’s not as accessible as Polkadot, which automatically shares your security with everyone.
Polkadot’s shared security model is convenient and reliable, but those who want maximum control over their project may feel more comfortable using Cosmos to set their own rules.
Use cases
In terms of blockchain itself, there are quite a number of use cases as it can be customized and brings together the strengths of different blockchains. Some examples include executing smart contracts, monitoring the flow of goods, gaining access to DeFi apps, and managing certain types of tokens.
For token use cases, on Polkadot, DOT holders can stake a portion of their earnings to nominate validators and will be rewarded for acting themselves.
ATOM holders in Cosmos can likewise delegate validators. The difference is that if stakers do not vote on a proposal, the validator will vote, giving them the right to vote. For Polkadot, validators are not directly involved in the governance system.
DOT tokens can also be used in more ways than ATOM, for example in parachain auctions where users can win their own parachain.
Holding DOT or ATOM means you have a say in how the network operates, and Polkadot has several additional staking options that may appeal to those looking to make the most of their on-chain digital assets.
accessibility
Polkadot is often considered more accessible compared to Cosmos, especially for those new to cryptocurrency and blockchain development.
It’s easy to jump into Polkadot if you can benefit from a strict security model from the start, but the addition of learning resources like PolkadotWiki and Kusama tesnet allows users to stake DOT in a low-risk environment before taking the plunge. Help us make our live trading server more user-friendly.
Both platforms also have tools (Substrate and Cosmos SDK for Polkadot or Tendermint for Cosmos) that can help developers build blockchains.
This time, Polkadot wins for how easy it makes the experience for users, while Cosmos is paying more attention to developers and investors who already have some know-how in building projects on the network.
scalability
Since the parachain auction first launched in November 2021, Polkadot’s network has been limited to 100 parachains at a time, and although this number is expected to increase, it does have some detriment to scalability. There are only so many parachains to go around, and as a result users have to secure them for themselves by participating in auctions.
This means that not everyone will have access to a parachain right away, and it can often take a lot of work to secure support through crowdloans to compete with others on the network.
In contrast, Cosmos is all technically individualistic and not joined together in one large hub, so there is no limit to the number of blockchains that can exist on the network. As a result, anyone can acquire the blockchain instantly, and Cosmos is much faster, capable of processing 10,000 transactions per second compared to Polkadot’s 1,000.
How to choose the right platform for you
The biggest factor to consider here is experience and comfort with multichain networks. If you are interested in using multiple blockchains but are new to the experience of building a full blockchain, Polkadot may be ideal as it automatically provides security and governance along with additional learning resources.
If you already have cross-chain practical experience or have an ambitious project in mind that you would like to manage without being bound by different rules, Cosmos is a more technical and individualistic alternative.
Essentially, do you want to be part of a large network where you can help run the network? Or do you want to do your own thing and enjoy greater personal freedom when building your blockchain?
On the flip side
- Polkadot and Cosmos are already facing stiff competition from other like-minded multichain networks. Avalanche, for example, is gaining popularity for its off-chain capabilities, especially smart contracts, while the Internet of Things (IoT) similarly allows communication between the real world and digital data.
- These kinds of platforms are bringing something new to the table and are worth checking out for anyone looking to break away from the limitations of standard blockchain technology.
Why This Matters
Let’s go back to the core goal of cryptocurrency. It provides true decentralization by allowing users to buy, exchange, and trade digital assets any way they want, without regulation.
The siled nature of blockchain has made it difficult for some time, but now platforms like Polkadot and Cosmos allow users to finally combine the best parts of each block, giving them the freedom to leverage their assets in new and exciting ways. The networks they support.
Frequently Asked Questions
The current market capitalization of the Polkadot network is over $10 billion.
There are a few multi- and cross-chain platforms that are currently catching people’s attention, but Solana is currently proving to be a big player due to its high liquidity and Cardano due to its smart contract features.
Tendermint is Cosmos’ consensus mechanism designed to ensure that transactions are recorded in the same order across all systems. This is to encourage blockchains to communicate securely without going off track.