Mobile Microtransactions: Explaining the Celo Cryptocurrency 

What if sending cryptocurrencies was as simple as texting a friend? While the idea of building crypto wallets into mobile devices has yet to go mainstream, projects like the Celo Network hope their software makes it simpler to meld cell phones with crypto applications. Using the latest innovations in decentralized tech, Celo provides a way for billions of mobile phone users to link their devices to its blockchain, unlocking a new world of intermediary-free financial possibilities. 

As Celo makes it simple to access crypto with the swipe of a finger, they hope to bring a new wave of users into web3. Discover how Celo works and how it's opening doors in the crypto economy. 

Celo’s history

In 2017, former GoDaddy executives Rene Reinsberg and Marek Olszewski teamed up with MIT professor Sep Kamvar to publish the first draft of the Celo whitepaper, outlining their goal to create a mobile-first cryptocurrency blockchain. Shortly after the whitepaper's release, Celo's co-founders created the nonprofit Celo Foundation to help organize development, raise funds, and promote the emerging Celo ecosystem. 

Between 2018 and 2021, venture capital firms such as Andreessen Horowitz (a16z) and Polychain Capital invested roughly $65 million into Celo, and the Celo Foundation launched the Celo mainnet in 2020. Also, in 2020, the Celo team released their CELO tokens to the crypto market and its proprietary USD stablecoin "Celo Dollars" (cUSD). 

One year after Celo's mainnet went live, the team introduced the "Donut Hardfork" upgrade to increase the network's scalability. In doing so, Celo instantly integrated with Ethereum's popular MetaMask crypto wallet and introduced crypto bridges to other blockchains, including Solana (SOL) and Cosmos (ATOM). 

How does Celo work?

Celo is a Proof-of-Stake (PoS) blockchain, meaning computers (aka nodes) on this decentralized network must lock (or "stake") the native CELO cryptocurrency to take part in transaction validation and earn CELO rewards. Although Celo is a standalone blockchain, it follows the coding standards used in the Ethereum Virtual Machine (EVM), making it simple for users to transfer virtual assets between the Celo and Ethereum ecosystems. 

A distinguishing feature of Celo's blockchain is its emphasis on mobile accessibility with the Celo Wallet app. After traders download the Celo Wallet on their smartphone, the app associates its private and public keys to the mobile device, providing a simplified user experience when storing, receiving, and transferring cryptocurrencies. The Celo Wallet also integrates with various decentralized applications (dApps), providing a way to explore decentralized finance (DeFi) activities such as crypto trading, staking, or lending. 

Aside from the CELO token, Celo offers proprietary stablecoins to its users, particularly the USD-pegged Celo Dollars (cUSD). To ensure each cUSD has a 1:1 value with the US dollar, Celo uses a cryptocurrency reserve and an algorithmic arbitrage trading protocol to adjust the circulating supply of cUSD. When cUSD prices rise above $1, the protocol mints new cUSD and sells them for CELO tokens. By contrast, if cUSD is below $1, Celo's reserve sells CELO tokens and uses those funds to buy back cUSD, decreasing the circulating supply to increase the market price. The goal of stablecoins like cUSD is to provide Celo users with a reliable cryptocurrency for transfers, payments, and remittances. 

Celo FAQs

What's the purpose of the CELO token?  

The CELO token is the native cryptocurrency on the Celo blockchain, and it plays a central role in securing the network via staking, incentivizing nodes, and voting on governance proposals. Celo also holds CELO tokens as part of its reserve to back the value of its stablecoins, including cUSD. 

As a fungible cryptocurrency, the CELO coin price has a 1:1 exchange value on crypto trading platforms. Crypto traders use a real-time CELO price chart on crypto price aggregators or exchanges to view the latest price per CELO.  

Is CELO an Ethereum token? 

Despite the Celo chain's EVM compatibility, CELO tokens aren't Ethereum-based cryptocurrencies and don't follow the popular ERC-20 token standard. While it's easy to transfer CELO tokens between the Celo and Ethereum chains, they aren't native to the Ethereum ecosystem.

Why do traders use Celo?

The Celo blockchain's goal is to encourage widespread crypto adoption by taking a mobile-first approach to digital currencies. Thanks to the Celo Wallet's integration with smartphones, it's possible to send and receive cryptocurrencies using a mobile number, making it easier for non-crypto natives to experiment with this technology. In addition to sending cryptocurrencies, Celo hopes its growing DeFi ecosystem, plus integrations with other blockchains, encourage more traders to explore the possibilities of web3. 

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