The Beginner’s Guide
Celo is a platform acting as a global payment infrastructure for cryptocurrencies that aims to target mobile users.
To this end, Celo’s goal is for financial activity to be accessible to anyone globally thanks to its ability for payments to be sent to and from any phone number in the world.
In addition to basic payments, Celo can support the development of decentralized applications on its blockchain. Thus far, these dapps include one allowing anyone to contribute to a community’s universal basic income scheme, as well as a crowdfunding platform for social causes.
Central to running the operations on its blockchain, Celo operates two native tokens: CELO, a governance asset for voting on changes to the protocol and Celo Dollars (cUSD), a stablecoin mirroring the value of the US dollar.
Users seeking to stay connected on the project’s current development status, and the dapps that are being built on it, can follow the official Celo blog for up-to-date details.
Who Created Celo Crypto?
Celo was co-founded in 2017 by Rene Reinsberg and Marek Olszewski, who were executives at the web hosting firm GoDaddy, along with Sep Kamvar and Marek Olszewski, an MIT professor and Google executive.
Between 2018 and 2020, Celo raised over $46.5 million by selling roughly 120 million CELO tokens in both private and public token sales. Notable investors include venture capital firms a16z Crypto, General Catalyst and Social Capital.
The Celo network relies on three contributors to help run its platform:
- Light Clients – Celo Network applications running on user’s mobile devices, such as Celo’s mobile wallet.
- Validator Nodes – Computers who participate in Celo’s consensus mechanism, validate transactions and produce new blocks.
- Full Nodes – Computers that act as the bridge between Validator nodes and mobile wallets, taking requests from light clients and forwarding transactions to validator nodes.
Of note, Celo’s system requires that the validator nodes be voted in by CELO token holders.
Byzantine Fault Tolerance (BFT)
Central to Celo is a Proof of Stake governance mechanism called the Byzantine Fault Tolerance (BFT) that keeps the distributed network of computers in sync.
In order for validator nodes to power the blockchain and vote on changes, they must first stake a minimum of 10,000 CELO tokens, meaning that anyone who owns CELO can help operate the network.
Currently, there are only 100 validator nodes at any one time, voted on by the full nodes, and each node is subsequently rewarded with a portion of the block reward for validating the transactions.
Full nodes receive their rewards from the fees paid out by the light clients.
A key feature of Celo is its ability to operate stablecoins, such as cUSD, which offers the efficiency and transparency of crypto transactions, while providing relief from the volatility of these assets.
Celo automatically ensures that the value of each cUSD equals one US dollar using what they call a programmatic reserve, an overcollateralized reserve consisting of CELO and other cryptocurrencies, such as Bitcoin (BTC) or Ethereum (ETH). This means that cUSD can be sold for an equivalent value of CELO, and vice versa.
In the future, Celo plans to allow CELO holders to propose and vote on the creation of stablecoins that mirror the value of other national currencies, such as the euro or yen.
The CELO cryptocurrency plays a key role in maintaining and operating the Celo platform, and can be used for sending, receiving, holding and staking.
By owning and staking CELO tokens, users gain the ability to vote on network upgrades, with each vote being proportional to the amount of CELO cryptocurrency they stake, and participants will earn rewards from the network for doing so.
Like many other cryptocurrencies, the supply of CELO tokens is limited, meaning that according to the software’s rules, there will only ever be 1 billion CELO.
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