The Republic of Estonia has announced it is considering creating a government-backed cryptocurrency tentatively named Estcoins. By issuing ‘estcoin,’ the Estonian government may hold an initial coin offering (ICO) with the aim to allow people to invest in the country directly.
With regard to technological innovation and advancements, Estonia is a leader, being the first country to launch an e-residency program. This program allows e-residents to access government services like physical Estonian citizens albeit digitally. Kaspar Korjus, the director of Estonia’s e-Residency program, announced the proposal on August 22.
Korjus believes the introduction of estcoin and its ICO would be beneficial for both physical and e-residents of the country. The ICO would allow investors to directly participate in the growth of the country in a way that is not possible with currents forms of international fundraising.
Vitalik Buterin, Ethereum founder and a supporter of the Estcoin Project, believes this would foster a greater feeling of cohesion between the country and investors saying:
“An ICO within the e-Residency ecosystem would create a strong incentive alignment between e-residents and this fund, and beyond the economic aspect makes the e-residents feel like more of a community since there are more things they can do together.”
In addition, Korjus revealed it would be possible to use the estcoins for more than just fundraising. The coin could be used to power smart contracts, notary services and even payments between companies in Estonia as well as internationally using API’s.
Expressing his support, Buterin added, “Additionally if these estcoins are issued on top of a blockchain (they could possibly be issued in multiple formats at the same time, nothing wrong with this) then it would become easy and convenient to use them inside of smart contracts and other applications.”
The money raised through the ICO would be managed through a Public Private Partnership (PPP). This partnership and all decisions regarding the funds would be governed by a binding legal agreement. The fund would go towards supporting the goal of further developing Estonia technologically.
Detailing how this would happen, Korjus stated:
“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 to funding the technological growth of the country, a portion of the funds will be used to create a Venture Capital fund, accessible to both citizens and e-residents. This fund would be community run.
Though Korjus did not give a definite timeline of when this would commence, if implemented it would be interesting to see how the cryptocurrency performs and the effects it would have on Estonia’s e-residency program as well as its economy. With the e-residency program growing beyond Estonian borders, and creating a new digital nation, estcoins may also become more popular than anticipated.
To follow the latest developments on estcoins and contribute ideas to help shape the project, you can sign up to the e-residency mailing list here.