Estonia is famous for many things; for having significantly more women than men (100 to every 84, or thereabouts), having free public transport in its capital, Talinn, and for passing a law in 200 which declared that internet access was a basic human right. At the forefront of a digital society – they also vote online, and have a literacy rate of greater than 99% – the Estonians now want to be at the forefront of cryptocurrency as well.
Looking to launch the ‘Estcoin’, Ethereum founder Vitalik Buterin is in discussion to help set this up via an ICO, or Initial Coin Offering. This is very similar to an IPO (or initial public offering), where new companies are offered to investors on the stock market to raise capital. The ICO will raise funds in a similar way by selling the cryptocurrency to investors, giving them a very personal stake in the project.
This isn’t surprising for a country leading the way in other forms of digital innovation, and they’re not limiting it to Estonian citizens living in the country either. They offer citizens of other countries all over the world “e-residency”, so that they have their very own digital ID. This gives non-Estonians – both resident in the country and not resident in the country – access to vital services for living and doing business in Estonia, such as tax and payment services, and also banking. Around 20,000 people have taken advantage of this so far, meaning that you could be sitting in Teddington just as easily as Talinn, register a business in Estonia, and enjoy a lot of the country’s commerce benefits.
The Estcoin, if it happens, will help to expand Estonia’s economy even further, taking it onto the global stage as a real digital player. It could be used to buy physical and digital goods and services, and even help to fund home-grown startups, particularly in the digital arena. Since Vitalik Buterin is closely involved, it’s likely that Estcoin will be closely based upon Ethereum.
This all sounds wonderful, but can anything go wrong?
The short answer is yes, just as anything can go wrong with any start up, whether it’s a company or digital currency. As it’s based around an ICO, one potential issue could be that everyone holding Estcoins will have – and indeed want – a say in how the fund is used. Since e-Residents don’t have to live within Estonia’s borders, this means that non-Estonians could potentially have a bigger say in how Estcoins are used than Estonians do. Since the ICO could potentially involve something like 10 million digital ‘residents’ (and Estonia only has a population of 1.3 million people!), this is a significant worry.
It could also potentially upset Estonia’s own currency, the Euro; however, since this is the currency of much of an economic region rather than just a national one, this is rather unlikely.
What is true is that the concept of different countries having their own cryptocurrencies is a very exciting one!