Celo -The Cellphone Cryptocurrency Payment System
celo cryptocurrency

Celo -The Cellphone Cryptocurrency Payment System

Celo is a crypto-currency that wants to make financial services available to anyone that has a mobile phone. One of Celo’s main goals is to make it possible to send cryptocurrency to anyone simply by using their cell phone number. In theory, this would make using cryptocurrency much easier and accessible to a wider range of people and is an exciting prospect. As exciting as this concept is, it's also important to be aware of the potential drawbacks and risks of the system. In this article, we will briefly discuss the Celo cryptocurrency, how it functions, some of its potential shortcomings, and compare it to other payment methods.

Introduction and Goals

I believe that Celo’s team correctly identifies two of the most significant barriers to mass adoption of cryptocurrency in their white paper. According to the team, the two biggest obstacles to cryptocurrency adoption are ease-of-use and purchasing power volatility. I agree with this assessment. The drawbacks of using cryptocurrency for everyday transactions are well-known. Price volatility may be good for investment and speculation, but it is terrible for an everyday method of payment. If I'm buying something that costs $20, I want to pay exactly $20. At the same time, using cryptocurrency requires setting up a wallet, and this can be confusing for many beginners.

For Celo to succeed, however, it needs to do more than just simply ask the right question. It also needs to provide the right answers. Celo’s solution to this dual problem is to create a stablecoin paired with its mobile-friendly payment system. Unfortunately, the purchasing power volatility issue has been solved countless times over through stablecoins such as USDC, Dai, Tether, etc. Thankfully, Celo’s strategy isn't just the creation of another stablecoin. Rather, it is the pairing of the stable coin with its mobile-friendly payment system. So, if we want to understand Celo, we have to take a deeper look into the mobile payment system and how it differs from traditional cryptocurrency transactions.

Celo Advantages

For a traditional cryptocurrency transaction to be made, both parties have to have cryptocurrency wallets before the transaction. For example, if I'm trying to send you some BAT for helping me design a new website logo, I will need your public key. You won't have a public key until you have downloaded, installed, and set up some form of a cryptocurrency wallet. Forcing newbies to install, download, and set up a cryptocurrency wallet before even receiving crypto can seem somewhat intimidating, and it might be easier for them to simply request payment in fiat instead. 

By contrast, Celo allows users to send cryptocurrency to anyone that has a phone number. Celo’s key value proposition is that it allows cryptocurrency to be sent to someone who does not have a cryptocurrency wallet at the time of the transaction. This advantage has two parts. The first advantage that Celo has over simply sending Dai/USDC to an ETH address is the temporal aspect. When you send crypto through Celo, the person will receive a message that tells them they have been sent crypto and also includes a link to download and install the Valora wallet to “claim” their crypto.

At the end of the day, both parties to the transaction still need to have a cryptocurrency wallet, But Celo allows crypto to be sent first, before the recipient’s wallet is created. The second advantage is the ability to send cryptocurrency to a cell phone number instead of having to memorize a string of characters for somebody's public key.

A More Critical Evaluation

I realized that one of the most important parts of cryptocurrency is freedom of choice, and I always welcome new cryptocurrency projects because they give people choices to find the best solution that works for their needs. Hopefully, the Celo cryptocurrency project delivers many of these advantages and makes it easier for large numbers of people to use cryptocurrency. Although I am optimistic, I think it's also important to probe any new project to discover potential shortcomings and avoid being carried away by overly optimistic expectations. 

With this in mind, I think that the crypto space is full of projects that are attempting to solve the ease of use and price volatility problems, and Celo will have an uphill fight to convince users why it's specific way of solving these problems are better than its competitors. As discussed, the stablecoin issue has already been solved by countless projects, and there are many digital payment methods already in existence that don't require setting up or installing a crypto wallet.

Valora Wallet Quirks

Although Celo does allow people to send cryptocurrency before the wallet is created for the recipient, at the end of the day, the recipient still does have to create a wallet. Unfortunately, Celo’s current mobile payment wallet Valora appears to be confusing to many users and they are wary of the fact the ability to cash out their crypto is still in development. Again. I realize that Celo is still in the development phase, but, if the whole purpose is fostering ease-of-use, making the withdraw terms clearly understandable should be a top priority. Therefore, I consider it a significant drawback that so many users are having trouble with the wallet. 


Because Celo is a cryptocurrency, it runs into the inherent problem of requiring a fiat on ramp. Now, I fully understand that this is going to be true for every cryptocurrency and is not specific to Celo. However, at the time of writing, it appears that there is no easy way to buy the Celo stablecoin and that you first have to buy their CELO governance token and then swap for the Celo Dollars stablecoin. Again, I know this is a development phase issue, but this adds an additional layer of complexity that could be off-putting to new users, especially those who seek out Celo because of its claims of simplicity. 


Further, Celo aims to make it easier to send cryptocurrency by allowing people to send to cell phone numbers. The problem of memorizing and sending funds to long strings of characters known as public keys is well known which is why many services, such as unstoppable domains have emerged that make it easier to send cryptocurrency to human-readable formats.

Celo's Competition

Not only is Celo competing against crypto naming services, but, since it is sending a stablecoin, I think that most consumers will also compare it to existing mobile payment apps. For example, will consumers go through the trouble of downloading Valora, purchasing CLEO, exchanging CLEO to the stable coin, sending it to the recipient, then having the recipient download Valora when they can simply send payment through Facebook Messenger or Cash App? I realize that Cash App and Messenger are sending fiat, and not crypto, so they aren't perfect equivalents to Celo. Still, it's possible that a significant number of consumers will simply prefer to send fiat instead of going through all the additional steps required to send Celo.  

*It appears that Cash App now indeed supports sending crypto, which further increases the competition Celo will face. 


While the concept of sending cryptocurrency to a telephone number does interest me, I believe that it also has some drawbacks in and of itself. Part of the promise of cryptocurrency was banking the unbanked and making financial services more accessible to a wide range of people. With traditional cryptocurrencies, all that was needed was a mobile phone/tablet/laptop and a Wi-Fi connection to download and install a wallet. The Wi-Fi connection didn't even have to be purchased through part of a phone plan and could simply be obtained at an internet cafe, local library, or other hotspots. 

Although Celo attempts to simplify cryptocurrency transactions, I believe that it is inadvertently adding another prerequisite. In contrast to Wi-Fi and cell phone, users of Celo must also have a cell phone number which, depending on their jurisdiction, could also imply completing a KYC procedure with the phone company. Remember that Celo sent to a phone number still requires the user to receive the message and download and install Velora. Does this mean that the recipient must not just have a phone number, but also an active phone plan? I wasn’t able to find an answer, but I do believe it is an important question to ask. 

Who Is The Intended Consumer?

Lastly, I think that one of the most important steps any business can take is to properly identify their target market. As I see it, Celo is targeting a very small niche of people who are tech-savvy enough to understand the benefits of crypto but don’t want to install a simple, easy to use crypto wallet with well-established stablecoins. I feel that the vast majority of crypto users are going to want to stick to well-tested, well-established wallets and stabelcoins while people who aren’t comfortable using a “real” crypto wallet will be unlikely to install a phone-based crypto wallet to receive a stablecoin when they can simply receive funds through existing digital payment methods. 

As I said, choice and freedom are two of the most important principles in all of cryptocurrency. I would like to see Celo succeed so that it can give users one more option out of many. At the same time, I think that there is still much more work to be done on the process, and I'd like to make a few humble suggestions that I believe would help improve the project’s chances of success. 

  1. The mobile wallet needs to be streamlined for ease-of-use. Remember, Celo’s key value proposition is simplifying crypto and making it easier to use. Two key issues to be solved are making it clear to users when and how they can cash out as well as making the fiat on-ramp to purchasing Celo dollars much easier. 
  2. The target consumer needs to be clearly identified. Is the ability to send funds to a cell number enough to switch from well-respected wallets and coins to a new, less-well-known coin/wallet combo? Is the ability to send crypto instead of fiat enough to convince people to use Celo over existing digital payment methods?


As I say every time I write an article about a project, crypto is about choice and I realize that different crypto services exist to fulfill different needs. I am excited by Celo's potential, but I also believe that competition in the crypto space is intense. I'd like to hear your opinions. Have you used Celo? What do you think of it's value proposition? 

Thanks for reading!



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The Part Time Economist
The Part Time Economist

Hi everyone. I'm just a simple man trying to make my way in the universe. I am passionate about cryptocurrency and hope that I can make at least some small contribution towards promoting wider crypto adoption and understanding.

The Part Time Economist
The Part Time Economist

Hi everyone. This is just a place for me to post some of my thoughts and analysis. I hope that someone finds them useful.

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