For quite a bit of time, blockchain and digital cash were seen by some people more as a sort of “intellectual fetish” than as a proper way to solve financial issues related to everyday people. It is certainly not true, as new projects prove that digital money truly helps people across the globe by quickly eliminating common financial issues and impacting their everyday lives. One of these projects is Celo Blockchain, a platform/community focused on building an inclusive financial system using the blockchain technology, supported by a mission-aligned network of technologists and international nonprofit organizations.
Their first application is a social payment system, centered around mobile phones.
A Brief Story of Celo Blockchain
Unfortunately, the blockchain still has a long path to reach mass adoption as a severe competitor to traditional finances. For that, we can blame two main existing barriers.
The first is the deterministic supply rules along with the unpredictable coin demand, which means that popular crypto coins with more demand go through a deflationary price instability. Hence, users intuitively tend to just lock it as stored value, instead of effectively use it as digital cash.
And last (but not least), even when users decide to use this price-volatile crypto coins as payment for products or services, they still need to go through a private or public key pair to receive the amount, which takes time and effort by both sides of the deal.
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This obstacle, especially when compared to other faster means of payment, such as PayPal, for example, can look somewhat inconvenient for users, which precludes many people from adopting crypto as their primary source of cash for payments.
For Celo, sending a payment using crypto must be as easy as sending a text message, with the currency’s volatility as minimal as it can be. So, they have designed a protocol to address these issues, based on a unique cryptographic technology combined with the use of the stable coin.
How Does Celo Works?
Celo is an open-source platform that aims to solve finance-related issues for unbanked and underbanked populations worldwide, being the pioneer of mobile-first blockchain platforms.
Allowing a set of financial tools for everybody who has a simple basic smartphone, it enables users to make value transferences much faster and cheaper than it would be using traditional banking systems, due to the nature of the blockchain itself.
As we know, digital assets are utterly programmable via code structure; it’s also possible for contributors to create a vast array of financial services, without any sort of third-party control.
The platform plays a crucial role in the digital finances scenario, as it was inspired by extensive research in emerging third world markets, meaning it is not just an idea out of cold paper, but a project deeply rooted on the necessity to fulfill gaps concerning financial issues for several needy populations.
The protocol has introduced a new cryptographic scheme to make the idea available using just a smartphone, wherever access to the internet is open.
The scheme is so-called Address-based Encryption, in which participants verify a set of cell-phone number-to-public-key mappings, which allows a user to use his friend’s cell phone number as a public key, for example.
To address the volatility issue, the platform uses USD as its current form of value. USD are Celo Dollars, a stable asset based on USDC, a US dollar-pegged crypto coin, well-known for its stability. You can easily store and exchange your coins using the Celo wallet.
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By using USD, users have the opportunity to share money via a smartphone app to pay for products or services, making the process easier and more convenient.
The platform also has a native token, the CELO, which is used as an exclusive governance asset for the community. CELO’s have a fixed supply, but the value varies as the crypto hustle goes on. Users who hold these native governance assets can participate in important decisions and help to shape the platform’s policies and directions.
What’s the Impact on the World?
A revolutionary idea on its’ right, Celo has impacted the lives of thousands of individuals around the globe, including Tanzania, Colombia, Mexico, Kenya, Argentina, Philippines, and Brazil.
This last country, for example, has experienced an increase in the usage of blockchain technology. The number of Brazilians stable coin traders quadrupled since early 2020, which means a lot, considering the country’s financial system is rigged by bureaucracy and institutional control.
Celo can play an essential role in this scenario, especially when it comes to enabling a user-friendly instant payment method using a local currency-pegged crypto coin.
Can Celo Solve Financial Issues Faster and Cheaper?
Designed as a mobile-first blockchain platform, Celo develops stability-focused tech innovations to solve financial issues faster and cheaper than traditional banking systems.
Their first application is a social payments system, empowered by the unique Address-based Encryption to substitute private key technology. It uses cUSDC as their main asset for negotiation, allowing users to have a US dollar-pegged digital currency as their source of digital cash.
Focusing mainly on unbanked and underbanked populations in the third world and developing countries, the platform has already had positively impacted a vast number of people around the globe.