The Republic of Estonia has gained recognition for being one of the most advanced digital societies in the world. In 2014, Estonia became the first country to offer an e-Residency program, a government-issued digital identity that enables entreprenures around the world to manage a location-independent business. The program is a founding partner of eTrade for All, an United Nations initiative to improve the ability of emerging economies to use and benefit from e-commerce.
ITU News interviewed Kaspar Korjus, the Managing Director of e-Residency, who recently posted an online proposal for the head-turning idea of Estcoins – an initiative that could make Estonia the first country with an Initial Coin Offering (ICO).
The idea of Estcoin is about issuing crypto tokens – allowing people to invest in our country – not launching a new currency. Estonia is, of course, totally committed to the fact the only currency of the euro zone is the euro.
e-Residency is run as a government startup, so it combines the credibility and trust of government with innovative ideas from the private sector. Estonia is at the forefront of digital innovation and has already moved forward with many innovative ideas, such as digital IDs, e-governance, e-voting, e-Residency, and data embassies.
“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.” – Kaspar Korjus, Managing Director of e-Residency
There is strong interest in blockchain-based solutions among our growing community of e-residents. In particular, the rise of crypto assets has led to an interesting innovation in the private sector called an Initial Coin Offering (ICO), which enables companies to crowdfund their finance and incentivise a wide range of people to help grow their business.
Many people already talk about investing in opportunities related to our country — such as companies, projects or bonds. A government-supported ICO would give more people a bigger stake in the future of our country and provide not just investment, but also more expertise and ideas to help us grow exponentially. An ICO within the e-Residency ecosystem would also create a strong incentive alignment between e-residents and this fund, and beyond the economic aspect makes the e-residents feel like more of a community.
Regarding the use of these Estcoins, in our proposal, we mentioned several scenarios paving the way for a national discussion (a community-run VC fund to support the development of Estonian companies, a PPP with an agreement to help build the digital nation with investments in new technologies and innovations for the public sector… But many options should be discussed). There are several ways that the initiative can be structured, but it is important that Estcoin investors gain only when all of Estonia gains. Creating instruments such as Estcoins where incentives between government and holders of these instruments are aligned could be a win-win.
We think it is necessary to have a meaningful national conversation about if/why we should experiment and try new digital ideas such as this one. This is how we try to be useful to the Government of Estonia and Estonian citizens.
The conversation is at a very early stage right now, we are currently gathering feedback from institutions, private sector partners, Estonian officials and experts. We welcome all the comments and we want this discussion to be public. We see a lot of enthusiasm, but we also listen to concerns.
For instance, we know that security and transparency are very important issues. We believe Estonia’s secure digital identities are the best solutions for trading crypto assets in a trusted and transparent digital environment. It avoids tokens to be counterfeited or used for illegal activities.
Indeed, Estonia has a clear advantage in the area of crypto assets due to its advanced digital infrastructure and its e-Residency programme. 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.
We had similar feedback from Blockchain-related companies having operations in Estonia. Blockchain pioneers face high costs to verify who they are dealing with online and also high risks if they get it wrong. A secure government-backed digital identity helps simplify the know-your-customer (KYC) process for startups.
Before publishing the article and launching the idea, we have consulted many experts from both public and private sectors, Vitalik Buterin being one of them. He has provided valuable feedback for the estcoin proposal. He believes estcoins could be used to incentivise investors to support the success of a country in a way that is not currently possible through existing means of raising international finance.
Obviously, we don’t want to propose an unrealistic idea, that would be the best way to end the debate very quickly. We are ambitious but we only want to propose projects that can be achieved.
Our goal with presenting the idea of Estcoin is to get feedback and gather thoughts before moving ahead with developing the idea further. If there is support for this proposal, then the next stage before the ICO could be to provide a white paper that outlines the value of estcoins and how the investment could be used.