This Country May Launch Its Own Virtual Currency
If you’re already having trouble keeping track of all the virtual “cryptocurrencies” out there, then here’s another one that might end up on your radar: the Estonian “estcoin.”
Estonia isn’t the first country to consider launching its own digital currency as a rival to the better-known likes of Bitcoin and Ethereum—China’s central bank is quietly testing the idea of a new cryptocurrency, and Russia’s central bank is considering the same. However, Estonia may have an advantage in the public-sector digital infrastructure that it’s already built, and it sees the idea as a way of allowing people around the world to directly invest in the country’s digital aspirations.
Over the last two-and-a-half years, Estonia has offered so-called e-residency to foreign entrepreneurs who want to virtually site their businesses in the country. The program gives people an Estonian government-backed digital ID, the ability to simply register an EU company, access to business banking and payments services, and tools with which to digitally sign documents. So far, more than 22,000 people have signed up from around the world.
In a Tuesday blog post, Kaspar Korjus, the managing director of the e-Residency program, said this experience gave Estonia an edge over other countries that are considering the introduction of national cryptocurrencies. Indeed, the estcoin could become bound up with the rest of the e-Residency ecosystem.
“No other country has come close to developing both the technology and the legal frameworks that would enable them to introduce and securely manage tradable crypto assets globally,” Korjus wrote. “The secure digital identities used by e-residents (as well as citizens and residents of Estonia) are now the ideal mechanism for securely trading crypto assets in a trusted and transparent digital environment. The tokens cannot be counterfeited and the government oversight means they cannot be used for illegal activities.”
Estcoins could be used to pay for public and private services in Estonia, and “eventually function as a viable currency used globally,” he said.
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Korjus suggested that the “estcoin” could be launched through an initial coin offering (ICO), which is a trendy way of raising capital that gives investors virtual coins or tokens, rather than shares. He said the money raised through the issuing of estcoins could be managed through a public-private partnership that ringfences part of the funds for the development of Estonia’s “new digital nation. Perhaps unsurprisingly for a Baltic country that is often on edge about the possibility of an invasion from neighboring Russia, Estonia is keen to “ensure its state can function entirely independent of its own territory,” as Korjus put it.
“This would enable Estonia to invest in new technologies and innovations for the public sector, from smart contracts to artificial intelligence, as well as make it technically scalable to benefit more people around the world,” he wrote. “Estonia would then serve a model for how societies of the future can be served in the digital era.”
Part of the money could also be used to create a venture-capital fund that would support Estonian companies and those set up by e-residents, Korjus added.
Those who want to track the progress of the estcoin proposal can sign up to do so now. In the meantime, Estonia’s e-Residency team hopes people will provide feedback with the social media hashtags #estcoin and #eResidency. Once enough feedback has been gathered, the team will move onto writing a whitepaper on the subject before launching a pilot project to assess demand.