Submitted by Simon Black of Sovereign Man
Estonia took another step towards introducing a state-backed cryptocurrency.
In August Estonia’s director of e-Residency, Kaspar Korjus, floated the idea of an official Estonian cryptocurrency.
The European Central Bank president responded with disapproval, saying that the euro is the only currency allowed for nations in the European Union.
But Korjus’ latest post says that the country is moving forward with a cryptocurrency, and the new proposals do not conflict with the euro.
Estonia’s e-Residency office outlined three specific proposals for how the country could develop a cryptocurrency. They welcome input from e-Residents, as well as Estonian citizens, and anyone else interested in cryptocurrencies.
Estonia’s e-Residency program does not grant actual residency to participants. It offers an online identity with the aim of streamlining international business. Anyone in the world can apply, and gain access to online tools which help them better serve European customers.
Since Korjus’ August blog post, many cryptocurrency enthusiasts have joined the program, hoping the platform will help them invest in and use cryptocurrencies. Others are interested in the potential for the e-Residency program to help launch and legitimize ICOs (Initial Coin Offerings).
Korjus has proposed three possible digital tokens that could serve e-Residents.
One proposal would use the cryptocurrency to incentivizes use of the e-Residency platform. It would reward contributors, and facilitate transactions within the online e-Residency portal. This is the online platform which offers business tools to e-Residents. Korjus says the cryptocurrency could be used among e-Residents to trade, for example, legal and financial services.
A similar proposal would tie the cryptocurrency’s value to the euro, and limit its use to the e-Residency community. E-Residents would change their euros into tokens which they could use on the platform. Individuals could redeem tokens for euros at any time, without risking a change in token value.
The third proposal would make the tokens less of a cryptocurrency, and more of a secure online identity used to access certain tools in the e-Residency portal. Your online identity would be tokenized and added to the blockchain. In the same way that you can track each individual Bitcoin preventing duplication, tokens attached to your identity could prevent online forgery.
What this means
E-Residency is a “solution looking for a problem,” as Korjus put it.
By integrating the e-Residency program with a state cryptocurrency, Estonia offers another solution which could solve a number of problems.
First, it provides a safer platform for cryptocurrency users and business owners by issuing a secure online identity.
Then companies can launch ICOs from the e-Residency platform. Here, they will already have access to many interested investors. By voluntarily submitting to Estonia’s ICO standards, this legitimizes ICOs hosted on the platform.
And finally Estonia creates an online marketplace for trade of services. Businesses can interact seamlessly without having to exchange national currencies, and deal with international regulations.
What this forms is the first digital nation. Korjus readily admits that Estonia does not know what the e-Residency or state backed cryptocurrency will evolve into. That direction depends on demand from e-Residents.
States are notoriously slow at adopting new technology. But Estonia is leading the way in bringing governance into the technological age.
And that is what makes Estonia so innovative when it comes to governing. This attitude could very well make the small nation a driving force behind the modern economy.