Estonia considering ‘estcoin’ ICO for e-residents

The Estonian government is considering an Initial Coin Offering (ICO) for a cryptoasset called estcoin. The resulting sale would enable “anyone to invest in a country for the first time,” explains Kaspar Korjus, the Managing Director at e-Residency.

Korjus explained that the funds could be managed through a Public Private Partnership (PPP). 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. Estonia would then serve a model for how societies of the future can be served in the digital era.

In addition, a large proportion of the funds could be used as a community-run VC fund on behalf of investors. The money could then be used to support Estonian companies, including those established by other e-residents.

The forward-thinking Director said that he is currently gauging interest for the ICO, and that “It is likely to begin as a pilot project that can be scaled up based on demand.”

“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.”
— – Kaspar Korjus, Managing Director at Estonia e-Residency

The small, Baltic country of Estonia has been one of the most technologically advanced nations since the invention of the internet. It was the first to offer its citizens free, public wifi and was the birthplace of Skype over 13 years ago.

Estonia is also the only country in the world in which its residents carry a public key infrastructure (PKI) card, which grants them access to over 1000 electronic government services. What started out as a simple government portal to offer Estonian citizens an online interface for their normal public services in 1994 turned into something far larger.

The country’s innovative e-residency program began three years ago and has already signed up over 23,000 e-residents from 138 countries, according to live statistics published on the program’s website. The United Nations recently partnered with e-Residency to launch eTrade For All, which is helping tackle financial exclusion in developing countries.

“Why stop there?” Korjus ponders, “Our digital infrastructure can handle far more ‘users’ than the current population.” The platform now offers secure digital identification and business registration to people all over the world, and the list of benefits available to them have been growing ever since.

In a nation of only 1.3 million citizens, the new non-resident ‘e-residents’ have quickly grown and started to become a larger part of the country’s population than the program initially planned for. “The weekly application rate is currently higher than Estonia’s weekly birth rate,” Korjus exclaimed.

The director credits the program’s popularity to it offering "huge value to entrepreneurs seeking trust, location-independence, minimal bureaucracy, low business costs and access to a wider range of fintech services.” He said that it solves “a major problem facing our world, which is how to ensure everyone has the opportunity to benefit from entrepreneurship and rising e-commerce.”

However, this is only the tip of the iceberg in what the program offers, and Korjus states that there is major growth ahead, which may require major funding.

“As more people discover e-Residency, more uses for e-Residency are being discovered.”
— – Korjus

Ethereum creator Vitalik Buterin has long been familiar with the project, and was recently hired by Korjus as a consultant for the ICO. The Director says that Buterin suggested that “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.”

"An ICO within the e-Residency ecosystem would create a strong incentive alignment between e-residents and this fund,” Buterin added, “and beyond the economic aspect makes the e-residents feel like more of a community since there are more things they can do together.”

The project now needs a white paper that outlines the value of estcoins and how the investment will be used “to develop our digital nation,” Korjus explains. “It is likely to begin as a pilot project that can be scaled up based on demand.”

“Estonia has a clear advantage in this area due to its advanced digital infrastructure and its e-Residency programme,” Korjus noted. “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.”

“In the long term, however, governments may have no option but to (literally) accept cryptocurrencies.”
— – Korjus

Estonia’s government is easily among the top nations embracing blockchains. Half a dozen or more blockchain initiatives are deployed across several different Estonian industries already.

Swiss startup Procivis created a blockchain-based platform that offers a wide array of public service applications. It now offers both Estonian citizens and e-residents apps such as e-voting, online business registrations, notary services, tax filing, and identity management.

The country’s healthcare records are also secured on their own blockchain. A blockchain startup named Guardtime partnered with the Estonian e-Health Authority in early 2016 to secure over a million health care records on a private blockchain. The same company was soon awarded a contract by the Estonian Ministry of Defence, working closely with NATO, to design a blockchain-based solution to modernize the NATO Cyber Range internet defense platform.