Estonia is pursuing its plan to become the first country to launch a crypto-token, even after Europe’s top banker slapped down the idea when it was proposed in August. The managing director of Estonia’s e-residency program announced today that work on “estcoin” is underway, and provided other details about the scheme. The program allows e-residents to set up an Estonian company in a day and administer it remotely—a scheme that gained popularity after the Brexit vote.
Mario Draghi, president of the European Central Bank, warned Estonia when the estcoin idea was first floated that “no member state can introduce its own currency.” Kaspar Korjus, the head of the e-residency program, says in today’s announcement that his team has figured out several ways to launch estcoins “without alarming the European Central Bank.”
The basic premise behind the proposed estcoin offering is to create a crypto-token for a “digital nation” comprised of the 27,600 people from 151 countries who are e-residents of Estonia:
- Estcoins as loyalty points. People could earn estcoins by referring others to become e-residents, or doing things that enhance the e-residency program. An ICO could raise a bunch of money for Estonia, and then people would either perform tasks to earn estcoins from a private-public partnership, or buy them on cryptocurrency exchanges.
- Estcoins as a digital signature. These tokens would be tied to Estonia’s digital identity platform. They’d be used as digital signatures, for logging in to government services, and so forth. Crucially, this estcoin scheme wouldn’t generate funds for Estonia, and they won’t be tradable, since they’re tied to a user’s identity. The scheme could lower the cost of identity verification.
- Estcoins as a euro-pegged “stablecoin.” A pegged cryptocurrency is the “holy grail” of the blockchain world. Big-time venture capitalists like Andreessen Horowitz are betting on teams that are working on this problem. A euro-pegged estcoin removes cross-border banking fees for transactions among e-residents.
The estcoin idea is tied up with a larger scheme by the e-residency program to turn Estonia into a “haven” for ICOs. Korjus writes that there was a spike in e-residency applications from people who wanted to invest in token sales. The next step for Korjus is to get token-issuers to become e-residents too, and launch their ICOs from within the program. Guidelines are being drawn up for token-issuers, according to Korjus.
Korjus was at pains to position estcoin as a “crypto-token” that isn’t a currency that competes with the euro. “Estonia’s only currency is the euro and this is an essential feature of our EU membership, which we are proud to have,” he writes. “No one here is interested in changing that.” The ECB hasn’t weighed in on the new proposed estcoin plans yet.
If Estonia succeeds with its plan to create a token for its e-residents to trade in, it could be the monetary glue to hold its “digital nation” together. Electronic payments specialist Dave Birch theorized in his book, Before Babylon, Beyond Bitcoin, that the future of money is one where “community is no longer geography,” and it’s communities who will have the most to gain from issuing their own, customized forms of money.