Some members of the Libra Association such as Coinbase Ventures and Andreessen Horowitz recently came together to launch a competitor to the Libra coin. The coin, which is called Celo, was launched on March 11. Its association, which has been dubbed the Alliance for Prosperity, launched with 50 members. The alliance will allow developers to create dApps that run on the Celo blockchain and the USD stablecoin.
How it Works
The Celo platform is an open-source platform, which is still undergoing testing. Its mainnet is set to launch in April. Thus far, Celo has raised $36.4 million since it was launched in 2017. Part of the funds came from the a16z Crypto venture capital firm run by Andreessen Horowitz, which bought $15 million of Celo’s Gold tokens in the Series A funding round.
The Major Difference
Celo’s blockchain differs from other blockchains because when users pay using the Celo Dollar stablecoin, the funds can be sent via a phone number instead of a complex blockchain address. It aims to create a blockchain that offers utility via a network of apps that do not spook regulators like Libra has managed to do.
Potential Conflict of Interest
Members of the Alliance for Prosperity include Andreessen Horowitz, Coinbase Ventures, Anchorage, Bison Trails, and Mercy Corps. All of them are currently members of the Libra Association. In the future, this could create a conflict of interest. It is especially so when it comes to deciding which digital currency and platform they will sell to their associates, integrate into their service, or use to deliver financial services to the unbanked.
Other noteworthy members of the alliance are GiveDirectly, Carbon, Maple, Grameen Foundation, and Polychain. The members of the association made only a vague commitment to back the development efforts of the project and implement certain use cases. Applications are open to anyone and there is no minimum entry fee of $10 million like the Libra Association.
Celo is Not a Replacement to the Dollar
Celo has no intention of offering an alternative to the dollar. For instance, its basket of reserve currencies is in cryptocurrencies instead of fiat currencies. This could make it more palatable for regulators, unlike Libra, which wants to have a reserve in fiat currencies. The platform has already launched its first dApp, the Celo Wallet, which is offered on the Apple App Store and Google Play Store.
Like most projects in the crypto space, this project has some lofty aspirations. Some of its use cases included enabling faster and cheaper remittances, reducing the complexities of delivering aid to the need, micro lending, and powering online work. Its main selling point is that it will offer lower fees than existing payment systems.
Its Main Threat to Success
During a TechCrunch interview, the head of the association, Chuck Kimble, said that the main threat to its success is accelerated developments in the banking sector. He also said their success would rely on LTE data and mobile adoption not exceeding their projected trajectory. Interestingly, the head of the alliance does not seem to be worried about the slow adoption of the blockchain or regulatory pressure, like Libra. Only time will tell if it delivers on what it promises.
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