Economic Progress

Estonia just revealed three uses for its proposed national cryptocurrency

A vendor receives a five Euro bank note from a customer at the central market in Athens, Greece, July 8, 2015.  REUTERS/Christian Hartmann/File Photo       - D1BEUFAAEFAB

Estonia revealed it was considering the creation of the world’s first national cryptocurrency. Image: REUTERS/Christian Hartmann

Dom Galeon
Writer, Futurism
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Economic Progress

In brief

Estonia's e-Residency program wants to revolutionize how the world does business. Part of their plan includes launching the estcoin, the world's first national cryptocurrency, and it has the potential to reshape Estonia in a number of ways.

An Estcoin ICO

In August, Estonia revealed it was considering the creation of the world’s first national cryptocurrency. Dubbed the estcoin, the digital currency would be part of an ongoing program in Estonia called e-Residency. The goal of that program is to give virtually anyone with access to the internet the ability to establish a business in Estonia without even setting foot in the Baltic state.

In a blog post published on December 18, Estonia’s e-Residency program managing director Kaspar Korjus explained that the e-Residency program is a government startup, and like most of today’s startups, it could be funded through an initial coin offering (ICO). He also outlined three potential use cases for the estcoins the ICO would sell.

The first use case for the estcoin would be as a “community” token. “The community estcoin would be structured to support the objective of growing our new digital nation by incentivizing more people around the world to apply for and make greater use of e-Residency,” wrote Korjus. “This includes encouraging investors and entrepreneurs to use e-Residency as their platform for trusted ICO activity.”

The second use case would be an “identity estcoin.” In this case, the cryptocurrency would allow members of the e-Residency society to do such things as digitally sign documents or log into services safely and securely. These tokens could not be sold or traded — they would be inextricably linked to their owners.

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The third use case is the most controversial. The “euro estcoin” would have a value linked to that of the euro, the fiat currency used in Estonia. Korjus claims this estcoin wouldn’t be an alternative to the euro, the creation of which is currently prohibited for any nation within the euro zone, but would instead be a token that combines cryptocurrency’s advantages with the stability of fiat currency.

While Korjus hasn’t set a date for the launch of an estcoin ICO, he did note that cryptocurrency enthusiasts have “expressed enormous interest and largely seemed to welcome the idea” since it was proposed back in August.

However, he also mentioned that traditional institutions haven’t been so supportive, but that skepticism doesn’t seem likely to deter Estonia’s e-Residency program from continuing on its current path.

“Change is coming,” wrote Korjus. “Crypto tokenization will alter the nature of our world whether we act or not, so we must ensure we are taking a lead and that is already happening in Estonia.”

If the estcoin does come to fruition, it could provide our first glimpse at a future powered by government-backed crypto.

Disclosure: Several members of the Futurism team are personal investors in cryptocurrency markets. Their personal investment perspectives have no impact on editorial content.

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Economic ProgressFinancial and Monetary Systems
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