Summary: Shorting Cosmos is pretty straightforward, all you need is a cryptocurrency exchange that allows for short selling. While there are a few exchanges out there that have added the ability to short crypto, our recommendation is to use eToro. They’re well-known, have a global presence, and are trusted by millions of users from 100+ countries.
We’ll be using eToro in our guide, you can sign up with one of the sign-up buttons below.
Before we get started, let’s quickly explain what shorting is (for those that are new to it). Shorting is the practice of selling a cryptocurrency hoping it will drop in price so you can buy it back later for cheaper… which, if successful, will give you a net profit.
It might sound a bit complex but don’t worry, it’s a lot easier than you might think.
How to Short Cosmos
Shorting Cosmos can be done in 4 steps:
- Find a cryptocurrency exchange
- Sign up with the exchange
- Fund your account with fiat or crypto
- Short Cosmos
1. Find a crypto trading platform
As mentioned before, for this guide we’ll be using eToro as they offer the ability to short the most common cryptocurrencies.
You can, of course, use any other crypto exchange that allows for short selling.
2. Sign up with the crypto exchange
Let’s start with creating an account on eToro.
The sign-up process is very easy and quick, as is the verification that needs to be completed afterwards so you can get started.
3. Funding your eToro account
Next is funding your account. You have several deposit methods to choose from when depositing funds into your eToro Account. These include a bank transfer, credit card, debit card, PayPal, and more.
4. Short Cosmos
These are the steps to follow to execute a short sell:
- Go to the search bar at the top, find Cosmos by entering the name.
- On the crypto page/section, on the right side, hit the TRADE button to enter the trading interface.
- At the top of the trading interface: Click on sell to short the crypto.
- Enter the amount for which you want to sell Cosmos and click on “Open Trade”.
Once you’re ready to close the trade, hopefully when the value of Cosmos has dropped, go to your Portfolio, find the Cosmos trade, and click on the red cross to close the trade.
If your assumption/prediction was right, then the profit will be added to your account after closing the trade. If you were wrong on the other hand, you’ll incur a loss which will be debited from your eToro account.
Congratulations, now you know how to short Cosmos!
Disclaimer: Trading, investing, and dealing with digital and cryptocurrencies might involve a lot of risks. Their prices are volatile and performance is unpredictable. Their past performance is no guarantee of future performance.
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Where to Short Cosmos (ATOM)
Aside from eToro, the other major exchange you can use is Binance.
While Binance tends to be a bit more advanced when compared with eToro, they do have a lot more digital assets to trade with.
Frequently Asked Questions
Can I short Cosmos on Binance?
Yes, you can short Cosmos on Binance. They have over 300 cryptocurrencies on offer, have a decent phone app and a lot of advanced trading features.
The Cosmos network comprises many separate, parallel blockchains known as zones. They are each powered by classic Byzantine fault tolerance (BFT), consensus protocols like Tendermint. (Already used by platforms ErisDB). Some zones act as hubs in relation to other zones. This allows many zones to communicate through a shared hub.
Architecture is a more general application of Bitcoin sidechains. This uses proof-of-work algorithms and classic BFT. To create a new Zone, you can plug in any blockchain system to the Cosmos hub. You can also transfer tokens between zones, without the use of intermediaries.
Cosmos hub is a distributed ledger that supports multi-assets. But there is an additional native token, called the atom. Atoms can be used in three ways: to prevent spam, to stake tokens, or to vote in governance.
Atoms are used for spam prevention and to pay fees. The fee can be proportional the amount of computation required for the transaction, similar in principle to Ethereum's notion of "gas". Fee distribution is done in protocol and a protocol specification are described here.
Atoms can be "bonded", or stake tokens in order to get block rewards. The number of Atoms staked is a factor in the Cosmos Hub's economic security. The higher the stakes and the greater the cost of attacking the network, the more Atoms are collateralized. So, the greater economic security of a network, the more Atoms that are bonded.
Atom holders could elect to rule the Cosmos Hub using their staked Atoms.