BLOCKNET VS. COSMOS

Will the real “Internet of Blockchains” please stand up?

They each claim to be the “Internet of Blockchains”, but which project deserves the title?

Background

Blocknet (whose protocols power the Block DX Exchange) has been using the slogan “Internet of Blockchains” since the project launched in 2014.

The Founder of Cosmos, Jae Kwon, admits to knowing that Blocknet was using the slogan when he launched Cosmos in 2016 — but decided to use the slogan anyway:

This article explains why Blocknet is faster, more secure and generally more deserving of the title “Internet of Blockchains” than Cosmos.

Cosmos is Slow

While Cosmos markets itself as an “interoperability solution”, it does not actually permit blockchains to interoperate.

It is not possible, for example, to send Bitcoin and receive Litecoin via blockchain protocols.

Rather, trading on Cosmos is a 3 step process:

Deposit — Sending Bitcoin to a Cosmos pegzone smart contract, in exchange for tokens in the Cosmos pegzone which “represent” Bitcoin. Exchange — Exchanging “Cosmos Bitcoin” for “Cosmos Litecoin” in the Cosmos pegzones Withdrawal—Withdrawing “Cosmos Litecoin” from the Cosmos pegzone for actual Litecoin

This process is inherently slow for the following reaons:

Before crediting a user with “Cosmos Bitcoin”, the Cosmos network must wait a sufficient number of blocks in order to give a high level of confidence that the deposit is “final” and the user did not double spend. (Source)

and

Due to Cosmos’ susceptibility to 34% attacks (discussed later in this article), any withdrawals out of the Cosmos pegzone must be sufficiently delayed to allow for challenges to be made by independent auditors.

“The Hub and the origin should allow the bridge-zone validators to post collateral, and token transfers out of the bridge-contract should be delayed (and collateral unbonding period sufficiently long) to allow for any challenges to be made by independent auditors.” — Cosmos Whitepaper

It is not possible to know at this time how many confirmations will be required for deposits and withdrawals, as Cosmos pegzones still remain highly experimental and still a few years away. We can be sure, however, that the process will be necessarily slow, as a result of Cosmos’ limitations/vulnerabilities and the fact that its continued operation depends on the assets actually being backed one-to-one on the native chains. (The current experimental Ethereum pegzone requires 100 confirmations for deposits)

Blocknet is Fast

With Blocknet, the exchange of assets takes place via atomic swap directly on each respective blockchain natively.

The number of confirmations required for the swap to complete is set by the parties involved in the exchange, and by default it is set to zero.

Blocknet’s various security checks and network of 500+ Service Nodes running full nodes of the compatible blockchainshas allows for near instantaneous 0-confirmation atomic swaps to be performed with a high degree of security.

Blocknet is Secure

Users of Blocknet trade directly peer-to-peer via atomic swaps and maintain control of their private keys at all times. There is no risk of users ever losing their coins.

Cosmos is Susceptible to 34% Attacks

According to the Cosmos Whitepaper, a rogue validator set with just >⅓ voting power is able to double spend.

While the rogue validators could theoretically be forked out, the situation is highly undesirable as it would require manual intervention and the double spent coins on the native chains would not be recoverable.

Worse yet, a rogue validator with >⅔ voting power could steal outright from the network.

This is concerning, given that the voting power in Cosmos is highly centralized.

An analysis of the Cosmos network by POS Bakerz, found that the top 10 Cosmos validators own 56.6% of voting power, while the top 50 validators own 96.2%.

Data accurate as of May 15, 2019 (Source)

The security risks with Cosmos are ultimately the result of users not controlling their own private keys on the native chains. Without their private keys, users are susceptible to attacks against the Cosmos network (which would be significantly easier than a 51% attack against the Bitcoin or Ethereum networks for example, and more profitable given the honeypot of assets locked in the Cosmos smart contracts).

Conclusion

True interoperability and a true “Internet of Blockchains” does not require a “platform”.

Platforms like Cosmos are security risks and only interoperate with custom chains built from its own codebase. In this respect, they are more like an intranet of blockchains rather than an internet of blockchains.

Blocknet is an open, unopinionated interchain standard that does not require building on a platform to interoperate with other chains. It is the real “Internet of Blockchains”.