The United States, Singapore and Switzerland are currently the main jurisdictions for entrepreneurs who want to launch their ICO. Estonia's e-Residency program is also a fast-growing startup - although it is a government startup - because it is constantly improving based on feedback from e-residents. So in August they published an article on the e-Residency blog that asked what would happen if a country, like Estonia, decided to launch its cryptographic token with an Initial Coin Offering (ICO). They called these "estcoin" tokens and explained how e-Residency could provide the global distribution and trading platform because it is a secure digital identity that anyone in the world can request.
The article has become viral, generating a great deal of media coverage at a global level, including most of the most important publications: about 200 million people around the world would have read it. Many people were enthusiastic and wrote about various options on how to structure estcoins. Many people were also critical, including some who wondered if the whole thing was nothing more than a publicity stunt for the e-Residency program.
Entrepreneurs and investors in the world of cryptocurrencies expressed interest and largely welcomed the idea, while traditional institutions were the most critical. The president of the European Central Bank, Mario Draghi, also expressed his concern.
Mario Draghi has swept away the dream of Estonia for a public cryptocurrency.
Much of the criticism of Estcoin, however, was based on the fact that Estonia simply can not create its own cryptocurrency, even if it wanted to. Estonia's only currency is the Euro and this is an essential feature of EU membership. Estonia is not interested in questioning it.
This is the reason why estcoin would be a "cryptographic token" rather than a real currency: it would only be "a more efficient means of value exchange globally". From the point of view of Estonia, estcoins have been proposed as a way to raise funds and support the development of the digital nation. In particular, Estonians would like these tokens to help build the e-resident community to increase the number of companies launched in Estonia through e-Residency.
But the question remains: "What problem does it solve estcoin for the people who hold estcoin"? In other words, how can ICOs be better supported through e-Residency? And how will it work estcoin?
Three variants of estcoin have been identified that could benefit both the digital nation and those who use it. All three of these estcoin models are feasible and can be introduced (even without alarming the European Central Bank).
The estcoin community. An ICO within the e-Residency ecosystem would create a strong alignment of incentives between e-residents and this fund, and beyond the economic aspect makes e-residents more like a community because there are more things than they can do together. The estcoin community would be structured to support the goal of growing the new digital nation by encouraging more people around the world to apply for and make more use of e-Residency. This includes encouraging investors and entrepreneurs to use e-Residency as a platform for trusted ICO activities.
The estcoin identity. In the heart of the digital nation of Estonia, as part of the e-Residency program, there is a secure digital identity, issued by the government. It is a leading global initiative in digital identity, but the underlying technology requires continuous development to remain at the forefront. Estonia is already a "blockchain nation" in many ways, so what if we start using blockchain technology to identify identities?
In this model, landmarks would be blockchain-based tokens used for activities within the digital society, such as digital signing of documents, access to services or the application of smart contracts.
The Euro estcoin. What would happen if estcoins were introduced simply by setting their value on the euro? This will be how the Euro estcoins will work. It will not be an alternative currency to the Euro, but it will be possible to combine some of the decentralized advantages of the crypto with the stability and trust of the legal currency and thus limit its use within the community of electronic residents.
The project is still under study, but this is a big step forward compared to the ECB denial of an Estonian "cryptocurrency".
