An Early Look at Celo: Part 1
The founders of Celo — Rene Reinsberg, Sep Kamvar, and Marek Olszewski — have a vision for a truly global and inclusive financial system. To execute on their vision, they aren’t just building an impressive technical stack, they’re also focused on building world-class, usable products. Their platform is centered on a mobile experience that allows people to send payments using only a phone number. Celo’s token model introduces the solution to the second problem with a native stablecoin, Celo Dollar, which is pegged to the U.S. dollar.
CoinList’s Justin Gregorius sat down with Anna Kazlauskas from Celo’s engineering team, to discuss the project in more detail. This is the first of a multi-part series on Celo.
Justin Gregorius: Thanks for joining us, Anna. To start, what is Celo and what are the problems that you’re trying to solve?
Anna Kazlauskas: Celo is an open platform that makes financial tools accessible to anyone with a mobile phone. The platform is initially focused on addressing the problem of financial inclusion: 1.7 billion people around the world lack access to financial services, making it harder to build a path towards prosperity. By starting here, we believe the resulting system will be more fully-featured and resilient for everyone. The entire stack from Celo’s stability protocol to the mobile wallet is being built with this greater mission in mind. Research in Celo’s target markets has informed key features of the platform, including the ability to pay fees in stable value currency and the ultralight client for wallet users with limited data connectivity.
Celo is backed by over 100 companies and individuals, including prominent global enterprises, NGOs, venture funds, academics, and experts across a wide range of fields who are all contributing in their own unique way to help achieve Celo’s mission of prosperity for all. Celo has a truly global launch plan, targeting an in-country presence in more than 20 countries around the world by the end of 2020. Most importantly, the Celo community is driven by purpose — to solve real-world problems such as lack of access to sound currency, burdensome remittances, or friction for cash-transfer programs to alleviate poverty.
Justin Gregorius: To the goal of usability, Celo plans to employ a distributed address-based encryption scheme. Can you explain the method in more detail and why it was chosen over other encryption schemes?
Anna Kazlauskas: To make transferring value on Celo as easy as sending a text, we designed a distributed address-based encryption protocol to allow users to send value directly to a phone number, rather than having to know a long random address string. In pilots run on Celo, the team found that phone numbers used as lightweight identity made it easier to send value, alleviating the hassle of having to get another user’s address before transferring funds. In the future, this lightweight identity could also be used to support users who lack a credit history through the use of Eigentrust, a decentralized reputation system designed by one of Celo’s co-founders Sep Kamvar.
To prove ownership of a phone number, the Celo verification process uses a decentralized network of validators to send confirmation codes. This is similar to the familiar process of receiving a verification code when creating an account with a centralized service, but instead uses randomly selected validators to send verification messages to new users. Once confirmed, the protocol stores a mapping of a hash of the phone number to the corresponding public key in a decentralized database. This scheme makes it easy for people to send value to their friends because they only need a phone number.
Justin Gregorius: How does this approach specifically impact end-users and how does it compare to the way users send other digital assets?
Anna Kazlauskas: From the user perspective, they don’t need to know anything about blockchain as the Celo protocol abstracts away the complexity resulting in a seamless user experience. End users who have not yet downloaded the wallet receive their initial communication about the Celo wallet and protocol via a text message from a friend, to initiate the onboarding flow. The message is generated by the wallet and sent from one friend or family member to another. This process syncs with the way that people have naturally adapted to communicate in a digital world. The wallet is easy to use from the sender’s perspective as well, as the contact book stored in their phone becomes the basis for the address scheme by which they send and receive messages. The sender feels like they are sending value via a phone number, similar to other modern social apps which are often phone-number based.
Justin Gregorius: Celo’s documentation asserts that users can send value to a peer’s phone number even before that recipient has created the public/private key pair; can you explain how this works in more detail?
Anna Kazlauskas: If a wallet user sends value to a phone number that hasn’t verified, the balance is stored in a smart contract escrow account, since there is no public key associated with the phone number. Once the recipient creates a Celo wallet and verifies their phone number, the funds are unlocked from the escrow account and sent to their new wallet. This allows existing Celo users to easily pay their friends who haven’t yet created a wallet.
You can learn more about Celo by visiting their website here.
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