The New Stablecoin You Can Exchange From Your Smartphone
Celo is a new cryptocurrency with some big ambitions. Namely, it aims to bring a faster, cheaper, more effective way to exchange money for the 6 billion smartphone users around the globe.
Celo works differently from many other popular cryptocurrencies. To begin with, you won’t need encryption keys, a computer, or any prior knowledge of cryptocurrencies in order to use Celo, and getting started with Celo is quick and easy. Celo creators have already issued two coins: the Celo Dollar and the Celo Euro.
Both these coins are stablecoins, which means they’re designed to hold the value equivalent to their identical fiat currencies. In addition, the company has a fixed-supply asset called CELO, a token used for the ecosystem’s governance.
If you’re still not sure what Celo is or how it’s designed, don’t worry. In this article, we’ll learn all about what Celo is, how it works, and what makes it unique within the world of cryptocurrencies.
What is Celo?
Celo’s mission is to connect people globally and bring financial stability to those who need it most –– all with the help of blockchain technology. When we say Celo is a cryptocurrency, that’s a bit of a simplification. Celo is actually a platform that enables new types of cryptocurrencies. And that means not just one coin, but several. Several stablecoins, to be specific.
A Brief Introduction to Stablecoins
Coins like Celo Dollars and Celo Euros are considered stablecoins. This means that their market value does not depend on the whims of a market’s supply and demand, but rather on the value of their pegged real-world physical assets. In the case of the Celo Dollar, its value is directly pegged to the US Dollar. In very simple terms, this means that the value of one Celo Dollar will be equivalent to the value of one US Dollar.
Since the value of Celo Dollars is strictly tied to the value of USD and other stable assets, there is no incentive to invest in the coin –– and there is also no need to. Unlike Bitcoin and Ethereum, Celo will be used primarily to send and receive money, not to store and hold value.
A Blockchain-based Stablecoin
Like most other cryptocurrencies, Celo works based on a blockchain system. This is an algorithm that encrypts transactions and creates a new, secure ‘block’ every time a coin moves from one wallet to another. The blockchain that Celo created is decentralized and relies on smart contracts similar to those of Ethereum.
What this means is that there isn’t just one person or organization in charge of overseeing the Celo Blockchain. Rather, it’s publicly auditable and is regularly monitored in order to ensure greater security, fraud protection, and transparency.
How Does Celo Work?
Now that we’ve discussed what Celo is and what makes it unique, let’s take a closer look at how it works. Who is in charge of Celo? What reserves back it up? And how can you take an active part in shaping the future of the Celo Coin?
The Celo Reserve
Every Celo Coin in circulation is backed by the Celo Reserve which is made up of CELO (a native, fixed-supply asset) and a basket of other cryptocurrencies. Since Celo is based around an elastic supply rule, the number of Celo Coins in circulation can adapt to fluctuations in demand. And thanks to local coins, the reserve can theoretically release more Celo Dollars into circulation while taking Celo Euros out of circulation, and vice versa.
Celo’s Governance Model
Celo currently has 75 official members in its alliance, including Deutsche Telekom, Andreessen Horowitz, and the popular crypto exchange platform Coinbase. However, these are not the only people or companies that have a say in the future of Celo. Anyone can join Celo's governance system by purchasing CELO, or by helping to improve the platform.
The Role of Participants
Celo’s innovative governance model also means that every participant can take part in expanding the Celo platform. For example, users can contribute to Celo’s programming with additions to its software, by verifying users, or by electing verificators. Users who contribute to Celo in these ways are rewarded with lower transaction fees, empowering users to take part in the development and improvement of the platform.
What Makes Celo Unique?
The Celo platform enables the use of stablecoins. Stablecoins are still relatively new to the world of cryptocurrencies, and some expect them to become the next most popular method of digital payment once Diem takes off. But that’s not the only thing that makes it different. Here are three other unique aspects of the Celo Coin you may not have known.
Full Smartphone Compatibility
Celo aims to be a cryptocurrency for everyone –– not just for blockchain techies or fintech enthusiasts. That’s why you won’t need much in order to send and receive Celo Coins. Celo is designed to work with just a smartphone and an internet connection.
As for transferring Celo Dollars or Celo Euros to others, exchanging money with Celo is as fast and easy as sending a text message. Senders can simply use a recipient's phone number to make a financial transaction –– and when signing up to a wallet that supports Celo, such as Valora, you need nothing but a mobile phone number.
Local Coins for a Global Economy
Although we live in a globally connected economy, the rise and fall of the prices of consumer goods still remain a local phenomenon. That’s why Celo coins are designed to be local with Celo Euros for Europe and Celo Dollars for the US.
Celo’s entire platform is based around local currencies, which are extracted from a shared reserve. It also has a protocol for the introduction of new crypto coins, which could see the light of day whenever its governing body deems it useful.
Simple and Accessible
In Celo’s official whitepaper, the masterminds behind Celo highlight the difficulties most people face when exchanging cryptocurrencies. With the majority of crypto coins, you need to know information regarding the public key of a receiver in order to transfer cryptocurrencies to them. Contrast that with Celo, where all you need is an email address or phone number to send someone Celo Coins — even if they haven’t opened a Celo account yet. Celo will be simple to use, simple to understand, and accessible for up to 6 billion people worldwide who own a smartphone.
3 Reasons to Start Using Celo
Celo is completely different from other types of cryptocurrencies you may be familiar with. To begin with, it’s completely decentralized. It also offers several local coins, works from smartphones, and offers users a chance to get involved. Here are a few more reasons to get started exchanging money with Celo.
Fast and Cheap Transactions
The main appeal of exchanging Celo Coins is that it’s a lot cheaper than making bank transfers. Bank transfers often incur large fees, especially when they are international. They can also take a few business days to go through. By contrast, exchanging money with Celo allows you to cut out the middleman when sending money to friends and family.
While Celo still has some transfer fees, they are much lower than the average bank. What’s more, you can expect your payment to go through in a matter of minutes.
Celo Is Secure
From its encrypted blockchain system to its elected verification in charge of approving new users, Celo puts in the work to protect you and your money from fraud. Given that new cryptocurrency users are often afraid of the threat of hacking, Celo’s many-step security protocols work to reassure them of the platform’s safety.
In the future, Celo may also be used by merchants to charge for goods and services — both online and in-person. Again, Celo’s fraud protection protocols will reassure both merchant and user that sending or receiving cryptocurrencies doesn’t have to be risky.
Do It All From Your Smartphone
To paraphrase the Celo whitepaper, exchanging money in the form of cryptocurrency will become mainstream when it’s as simple as sending a text message. If you’ve ever bought or sold cryptocurrencies on a crypto exchange site, it’s easy to see how this statement makes sense.
For the moment, exchanging cryptocurrency with friends and family is slow, cumbersome, and often very expensive. By contrast, sending Celo Dollars or Celo Euros is easy, stress-free, and almost instant. So if you’re put off by the complexity of the most popular crypto coins, Celo could be the perfect alternative for you.
Celo is a new financial platform that presents itself as a serious contender within the crypto-sphere. Its aim is to give everyone a chance at using cryptocurrencies to exchange money –– whether or not they have any prior knowledge or experience with digital money.
Together, First and Celo are paving the way for a more equitable and accessible global digital economy. With the shared mission of designing a more inclusive financial ecosystem, blockchain technology is helping us connect people around the world to the financial tools they need to make smarter, faster and cheaper financial transactions.