According to the Xenophobe’s Guide to Estonians, a somewhat tongue-in-cheek account of the little nation of Estonia: “for those countries not in Scandinavia or the Russian Federation, Estonia is perceived as part of Russia, or totally off the radar.” They could add: except, that is, when it comes to blockchain. While larger countries such as the U.S. and China may maintain a slight monopoly on blockchain patents with companies like Alibaba, IBM, Mastercard, and Bank of America, Estonia has become “the most advanced digital society in the world.”
Imagine a state where 99% of services are online and 100% of government data is stored on a blockchain ledger system and you’ve got e-Estonia. Healthcare, property, business, court systems, even Official State Announcements have gone digital. What’s more, the country is years ahead of its time pioneering an e-residency program, believing that countries will compete for e-residents like companies compete for customers — a digital race that they aim to win.
Let’s back up to the fateful year of 2007, to figure out how the hell Estonia managed all of this.
The Digitalisation of a Nation
It all began with a statue, specifically, the statuesque Bronze Soldier Soviet war memorial in the bustling capital city of Tallinn. The Estonians had decided to remove it, most likely because they were having a bit of a tiff with Russia at the time. Regardless of how it came about, however, the result was catastrophic. At the hands of what was later found to be a pro-Moscow youth group, Estonia was embroiled in an unprecedented wave of cyber-attacks that disabled the websites of national organisations ranging from political parties to banks and newspapers.
After recovering from the shock of (literally) having their entire nation taken off of the grid, Estonia vowed that they would never again be the victims of such a digital assault. That’s why, in 2008, right around the time when Satoshi Nakamoto was busy publishing the Bitcoin whitepaper, Estonia was internally testing “hash-linked time-stamping.” In fact, their official wording subtly hints that they deserve some of the praise lauded upon Satoshi. Are they right? We do not know, but it’s a possibility.
Fast-forward to 2012, and Estonia creates K.S.I., a scalable blockchain technology invented by none other than Estonian cryptographers. It’s meant to ensure data integrity and to protect against “insider threats,” which sounds a little paranoid until you consider the circumstances. No one, they say, not hackers, not system administrators, not even the government itself can manipulate the data and get away with it. Bold statements! This makes Estonia the first country to implement blockchain on a national level.
E-Residencies and Estcoins
But Estonia, being the generous Baltic nation that it is, was not content to stop there. They launched their e-residency programme as “Estonia’s gift to the world.” (It is, one must point out, also a monetary blessing to the Estonians. As Deloitte estimates, the e-residency will generate €31 million EUD in net income and another €194 million in net indirect socio-economic benefits by 2021.) For every euro that Estonia invests in the programme, it brings back a hundred times that number to the state. It’s the gift, it seems, that keeps on giving.
The premise is quite revolutionary, actually: with the brainpower of the Estonian IT sector (affectionately called the Estonian Mafia by the national website itself), the country targets a rapidly growing number of digital entrepreneurs and freelancers that are looking to launch businesses in a digital hub that’s part of the European Union.
So, success is the name of the game so far. For that reason, Estonia is focusing in on sharing their “e-stonishing” (yes, you can cringe) success stories via their e-Estonia Briefing Centre, which hosts over 10,000 “international decision-makers” each year. They’re aiming to give other countries the resources and tools to follow their lead into a digital future — the only roadblock being the EU itself.
Estcoin Versus the Euro
The EU tolerated more digital signatures being used in Estonia than the rest of its countries put together, but once Estonia started floating the idea of linking a cryptocurrency, “estcoin,” to the euro, top banking officials started to take note. Estonia’s crypto aspirations be damned! EU financial bigwigs put a stop to this part of their digital strategy immediately. We have no specifics on how this happened, but this harsh headline gives a hint: “Estcoin Backs Down as Banking Authorities Bully Estonia.”
Queue dialogue for context:
European Central Bank:
Ahem. (Clears throat.) “The currency of the euro zone is the euro.”
Estonia: “We’re not building a new currency.”
Right…so, European banking authorities have shut down estcoin as a legal form of Estonian currency. Estonia, however, still plans to use their eponymous cryptocurrency as an internal coin (sort of similar to Revain’s system) as an incentive for their e-residents. We’ll have to wait and see, but it’ll be interesting to track over the next couple years to see if the estcoin ever manages to stage a coup and gain official status.
Experimental Success
Despite the downfall of estcoin for the moment, we declare blockchain, e-residency, and e-Estonia as a whole to be an overwhelming success. They must be doing something right: why else would NATO, the U.S. Department of Defence, and European Union information systems have implemented their K.P.I. blockchain technology?
What’s more, they’ve upended the premise that private industry must lead the way into the heralded Internet 4.0 and blockchain utopias of which we all dream. A state, they’ve shown, even a tiny one, can remake itself into a decentralised digital society — starting from virtually nothing, we might add — in little over a decade.
At Revain, we think that consistent evaluation of blockchain projects is essential to ensuring that you’re making smart, informed investments. Our review-based platform does just that, giving you updates on which crowdfunding campaigns and coins are succeeding and which aren’t. Moreover, whether you’re interested in monitoring estcoin development or the latest crypto trends, you can follow our Medium page to get all your info in one place.
Thanks for joining us on the journey, as always. To sign off, we have a parting note in regards to Estonia’s success: in the words of Estonia’s president, Kersti Kaljulaid, “seeing this digital revolution up close…[makes for one conclusion] the state as we know it today is fit for the 21st century.”
Is that not an accomplishment like none other?
Brava, Estonia. Brava.
