Billions of dollars from around the world are pouring into cryptocurrencies today. While it’s an exciting time to participate in this crypto gold rush, it’s important to remind ourselves about why blockchain developers are rushing to do the things they are doing.

Failures of Global Finance

Globally, capitalism and the global financial system are pulling billions of

people out of poverty. And yet, either is increasingly perceived as unfair by the lower and middle class. It has become apparent that the debt-based global financial system is not compatible with major international goals of equality of opportunity and sustainability. As long as the economy will be artificially maintained by a constant influx of liquidities, those close to the source of credit will keep disproportionally benefiting, at the expense of the rest. This, combined with additional pressure coming from the maturation of automation technology like robotics and AI, create tensions in our modern societies that compel us to create an alternative.

There is a beautiful soup of solutions emerging to address these issues. They come in the form of alternative socioeconomic mechanisms for empowering communities: time banks, local currencies, demurrage (negative interest), mutual credit systems, community land trusts, community supported agriculture, co-operative legal structures, universal basic income, and so on. What is needed is reliable open-source and easy-to-use technological infrastructure to support these initiatives and to enable widespread experimentation, analysis, and ultimate deployment.

A New Technology Stack

Cosmos is precisely this infrastructure. Cosmos begins with a global pseudonymous Proof-of-Stake multi-asset permissionless blockchain with a built in governance mechanism. Stakeholders are obliged to participate in ensuring the system’s security and in determining how the system will evolve over time. But Cosmos is more than one blockchain — it is fundamentally a set of protocols and tools for deploying public and private blockchains and for enabling them to interoperate with one another.

Cosmos consists of a number of layers that enable this flexibility. At the bottom of the stack is Tendermint, a general purpose and high-performance Byzantine Fault Tolerant state machine replication engine. Tendermint enables applications to be written in any programming language, and to use arbitrary encoding schemes and application logic for transaction processing. Tendermint achieves this by abstracting all state machine logic through the Application BlockChain Interface (ABCI), which defines a set of messages and a simple protocol allowing Tendermint to propagate and order transactions in a p2p network while a separate application process determines what the transactions mean and how they update the state.

To simplify the design and development of ABCI applications on Tendermint, we have built the Cosmos-SDK, a framework for building ABCI applications in Go. The Cosmos-SDK uses a capabilities-based security model to ensure that in an ecosystem of third-party interacting applications, no application is able to access more than it should be able to, thus reducing the scope of security vulnerabilities. The Cosmos-SDK also provides an advanced implementation of a dynamic Merkle tree (an immutable AVL tree), allowing many different kinds of cryptographic proofs for queries to the state, while supporting iteration and arbitrary key-value storage.

Using these Merkle proofs and Tendermint’s highly simplified light-client protocol, Cosmos defines an Inter-Blockchain-Communication (IBC) protocol, enabling distinct blockchains to communicate securely with one another. This is a generalization of the concept of sidechains, but placed in a Proof-of-Stake setting with much higher performance and lower bandwidth required. IBC allows coins, and ultimately data, to flow securely from one blockchain to another and back, opening the floodgates to interoperability across a wide range of state machines.

Universal Basic Income

The beauty of the cryptocurrency and broader blockchain movement is that it inverts control, giving no one entity the absolute authority to issue, transfer, or redeem tokens. Just as a thousand cryptocurrency projects bloomed from the wake of Bitcoin, UBI experiments will likewise emerge from the bottom up in a permissionless fashion (as it should). For example, it isn’t necessary to prescribe the exact economic model of a UBI system, as long as the public keys of all residents are available to be copied into a new experimental UBI chain.

Much of the blockchain world is thinking about a winner-take-all market for the store of value/medium of exchange functions of currency. If local communities have their own store of value/medium of exchange, it enables them to experiment with UBI at the local level.

Before Cosmos, these experiments were doomed to failure because having a local store of value/medium of exchange meant cutting yourself off from the wider liquidity of the global marketplace. Cosmos provides a protocol for running bottom-up experiments at the community level while simultaneously providing liquidity into the broader global marketplace; this is the beauty of having a deeply integrated network of token economies.

Core Philosophy at Cosmos

At Cosmos, we’re building critical infrastructure and developer tools for the incoming wave of application-specific blockchains to create the next generation of killer applications which will bring blockchain technology—securely and efficiently—to the end-user, without them knowing it.

What we are committed to building in order to make this all work is to design a set of common protocols that provide the most security, scalability, and commit-speed, all the while being as approachable as possible given the user requirements. Cosmos is that infrastructure, and it is quickly nearing completion. We hope that Cosmos will underpin a new revolution in socioeconomic organization and ultimately set the stage for the forthcoming centuries of human civilization.