Estonia Progressing Toward Launching National Crypto Token ‘Estcoin’

“no member state can introduce its own currency. The currency of the euro zone is the Euro.”

Baltic nation working on its own crypto token – the Estcoin – despite criticism from ECB.

In a bid to become a global hub for initial coin offerings (ICOs), the Baltic nation of Estonia is moving ahead with plans to launch its own crypto token, the Estcoin.

The Estcoin will function as a crypto token for the country’s e-Residency program – a “digital nation” of 27,600 e-residents of Estonia from 151 countries around the world, who are allowed to set up Estonian companies in a day and manage them remotely.

The idea was initially floated in August this year, by Kaspar Korjus, managing director of the e-Residency program. However, European Central Bank (ECB) president Mario Draghi shot it down, saying “no member state can introduce its own currency. The currency of the euro zone is the Euro.”

In his most recent blog post, Korjus claims that the plan to launch the crypto token is still in effect, and work on the project is underway. However, he makes it a point to clarify that the Estcoin is a “crypto token” and not a cryptocurrency which aims to compete 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. No one here is interested in changing that.”

Korjus then goes on to detail how Estcoins might be launched “without alarming the European Central Bank”. He proposes three different ways in which Estcoins might be used by e-Residents.

• Community Estcoin: This type of crypto token would be used to support the e-Residency program’s objective of building a digital nation, by incentivizing people to earn Estcoins. They will be able to earn crypto tokens by encouraging others to apply for e-Residency or conducting activities which would further enhance the e-Residency program, such as “encouraging investors and entrepreneurs to use e-Residency as their platform for trusted ICO activity”. In turn, token holders will also benefit from the development and growth of the community.
• Identity Estcoin: This would entail the usage of Estcoins as “blockchain-based tokens used for activities within our digital society, such as digitally signing documents, logging into services or enforcing smart contracts”. This type of Estcoin will not generate revenue for Estonia, since it will be tied to e-Residents’ identities; however, it will contribute to network maintenance by lowering identity verification costs.
• Euro-Pegged Estcoin: For this to work, Korjus writes that the e-Residency program would aim to “combine some of the decentralised advantages of crypto with the stability and trust of fiat currency and then limit its use within the e-resident community”. This would require banks to get involved and move money in and out of the Euro-pegged Estcoins – however, once on the blockchain, it would completely remove cross-border payments fees for transactions among e-Residents. “All that is required is a digital wallet and the commitment of government to buy back every Euro Estcoin for one Euro,” writes Korjus.

The Estcoin, ultimately, is part of a larger plan for establishing Estonia as a global “haven” for ICOs, by using the e-Residency program as an entirely new method for conducting ICOs within the country. Korjus pointed out that many e-Residency applicants had expressed interest in investing in token sales. The next step, therefore, is to bring token-issuers into the fold as e-Residents, so they can use the e-Residency program as a platform to launch their ICOs.

In addition to outlining plans for the Estcoin, Korjus also admitted that the team behind the initiative was taking the global community’s feedback on the program seriously, including the criticism that Estcoin is just “a solution looking for a problem”.

However, work is underway to refine the crypto token in light of the feedback. If successfully developed and launched, the Estcoin will serve as a crypto token to further unite the “digital nation”, and help the e-Residency program establish a purely digital community which is unhampered by geography in every way.