Celo, the mobile-first blockchain ecosystem in the spotlight

Celo in a nutshell

When talking about blockchain technology, one of the first barriers that comes to mind is the assumption that you need powerful computers and top-notch systems to join in. Though this may be true in some cases, there are crypto projects that are working specifically to simplify the way people approach crypto and to make it accessible for everyone without the need for specific or costly hardware.

This is what Celo is all about: this open-source mobile-first blockchain ecosystem wants to drive the adoption and usage of cryptocurrencies by solving issues of usability and price volatility, while also bringing blockchain technology and decentralised finance to smartphone users.

Before deep diving into its mission and details, let’s take a look at Celo’s crypto ID: 

Celo’s mission

Celo’s mission, as stated in the project’s blog is: 

“To build a financial system that creates conditions of prosperity—for everyone”

Creating conditions to enable economic prosperity for all is an ambitious target. Nonetheless, Celo is actively pursuing this goal by expanding access to blockchain technology, DeFi and DApps to smartphone users, which is a target group that could comprise more than 7.69 billion people by 2027.

Problems with cryptocurrencies as means of payment

Two areas that the team behind Celo found particularly problematic for the mainstream adoption of cryptocurrencies as a means of payment were price instability and usability:

“For a cryptographic social payments system to prosper, sending a payment should be as easy as sending a text message, and the volatility of the currency should be minimal.”

Crypto’s price instability 

Both fiat currency and cryptocurrency can be used as means of payment. Crypto presents some significant advantages compared to fiat: money transfers are transparent, fast, and often have lower transaction fees. 

However, cryptocurrency holders tend to treat coins as a store of value, rather than a means of payment. 

If you’ve been following the crypto market for a while, you might have noticed that price swings don’t only affect altcoins: the price of Bitcoin is also subject to rollercoaster-like movements. According to the Celo team, this instability is making it hard for crypto to be used for payments. When you think about it, merchants might be wary of crypto payments because they fear the tokens they received will decrease in value. On the other hand, buyers could hesitate to spend their tokens, hoping the price will increase over time. 

User experience and usability issues 

The second issue has to do with user experience and usability. In fact, users who decide to use their coins as a means of payment, need to deal with private and public keys and with cumbersome wallet addresses that can be up to 35 characters long.

Though this is inherent in the system, it is deemed an inconvenience for users and which, according to Celo, is partly responsible for hindering the mainstream adoption of payments in crypto.

The solutions proposed by Celo

Stabilising the value of crypto

Celo sets out to reduce the volatility of cryptocurrencies by using a reserve portfolio of digital assets, the Celo Reserve, as a way to implement an elastic coin supply. 

Celo currently has two stable assets: cEUR and cUSD. Celo Dollar (cUSD) is Celo’s stablecoin that follows the value of the US dollar, and Celo Euro (cEUR) is the network’s stablecoin tracking the value of the euro. 

While CELO has a finite total supply, capped at 1 billion tokens, the supply of cUSD, cEUR, and presumably new stable-assets that will be implemented on the network can change and adapt on the basis of demand. 

Celo Dollar and Celo Euro, unlike other stablecoins, aren’t backed by the value of fiat currencies as their values are adjusted by Celo’s protocol. The elastic coin supply and the Celo Reserve work in synchrony to maintain stable values tracking $1 and €1 respectively. 

In fact, the Celo Reserve is a basket of cryptocurrencies and CELO tokens that are bought and sold in the open market precisely to adjust the value of Celo’s stable-assets and to reflect the tracked fiat currencies. Currently, the Celo Reserve holds more than $500M worth of assets. 

User-friendly addresses and privacy

On Celo, users can associate their phone numbers with one or more wallet addresses on the blockchain. This means that payments can be sent and received by simply providing the right telephone number.

However, displaying phone numbers on the blockchain could constitute a breach of privacy and make users way more susceptible to scammers and hackers. To avoid these problems in the first place, Celo adopts a system that involves not only phone numbers but also a pepper (a secret value which is added to a password before hashing). The pepper is a secret value given by ODIS, the Oblivious Decentralised Identifier Service, a service run by a group of reputable participants in the network. 

Users need to receive their own peppers from ODIS to associate their phone numbers with their wallet addresses on the blockchain. Through the pepper, users will be able to compute a special, unique value that works as an identifier for actions on the blockchain. 

Celo has recently partnered with Deutsche Telekom, whose subsidiary T-Systems MMS works as a validator group in the network. 

What is CELO? 

CELO is the network’s native token and it is used for governance, for participation in the consensus and payment of transaction fees. 

An important role of CELO is stabilising the value of Celo’s stablecoins, as it makes up more than half of the assets in the Celo Reserve. 

Users who are in the network and holding CELO can participate in the governance and submit proposals - for instance, they can suggest adding another stablecoin to the network. Block rewards and general incentives for participating and maintaining the network are also paid in CELO. 

CELO holders can also participate in the consensus - the network employs a Byzantine Fault Tolerant Proof of Stake consensus mechanism.

DeFi and DApps from your smartphone

Celo identifies the major challenges in the mainstream adoption of crypto as means of payments and tries to offer solutions for both of them, as we’ve seen above. 

However, the most notable feature of Celo - and surely an efficient characteristic of the protocol in terms of expanding crypto adoption - is its smartphone accessibility. Users of smartphones can easily get access to decentralised finance services and applications on Celo via their phones. 

The DeFi apps currently running on Celo are Ubeswap and Moola. Ubeswap is Celo’s mobile-first decentralised exchange and automated market maker protocol while Moola is the mobile platform for lending and borrowing crypto on the network. 

Celo is also EVM (Ethereum Virtual Machine compatible): this means that developers can create DApps and implement smart contracts on Celo just like on Ethereum and can also move them from Ethereum’s blockchain to Celo’s. 

The pursuit of financial prosperity is one that requires collaboration, and Celo wants to allow its community to donate crypto to social causes in a simple and user-friendly way. That’s why Celo partnered with DApps and protocols which are raising funds to alleviate poverty, to offset carbon footprints and other social causes.

Learn more about CELO and investing

Before making an investment decision, it’s best to learn more about the project you’re interested in. In this case, take a look at the price movements of Celo on Bitpanda - past performances don’t constitute an indication of future performance, but it helps to get the bigger picture. Check out Celo’s official website, celo.org, to learn more about the ecosystem, its mission and roadmap. Assess your risk tolerance and see if this asset would fit in your portfolio - and remember to take diversification into account.

Where can you buy CELO?

On Bitpanda, buying CELO has never been easier. Create your Bitpanda account and verify it with one of our identity providers, deposit your funds with the payment method of your choice - SEPA Instant included - and you’ll be set to start investing in cryptocurrencies, crypto indices, precious metals and many other digital assets.