The Baltic nation of Estonia is moving closer toward the potential launch of its own crypto token.
In a blog post published today, Kaspar Korjus, managing director of the country’s e-Residency initiative, set out three possible use cases for the token – dubbed “estcoin” – that have been arrived at since the concept was first aired in August. As Korjus noted in his blog post, the concept quickly went viral as speculation swirled that Estonia might become the first country with its own dedicated digital currency.
And while the e-Residency program isn’t yet launching the token, Korjus laid out some of the conceptual groundwork in the new blog post, noting the different ways in which the cryptocurrency might be used – as well as how the e-Residency program could serve as a basis for how initial coin offerings within the Baltic nation could be conducted.
Firstly, Korjus sets out the case for a “community estcoin,” which would be aimed to support the objective of developing Estonia’s aims to build a “digital nation” by incentivising people to “apply for and make greater use of e-Residency.”
This could include rewards schemes that pay out in estcoin, encouraging businesses to adopt the token, and also includes “encouraging investors and entrepreneurs to use e-Residency as their platform for trusted ICO activity,” he said.
A second use case for the token would be to provide a basis for secure, government-issued digital identities.
In this role, estcoins would be used as “blockchain-based tokens used for activities within our digital society, such as digitally signing documents, logging into services or enforcing smart contracts,” Korjus indicates.
While “identity estcoins” may ultimately need to be bought by users of the e-Residency scheme, they would not raise revenue for the nation, “but merely contribute to the maintenance of the network,” the post indicates.
Euro-backed coins?
However, a third – and perhaps more controversial – option could see the token pegged to the price of the euro – an idea that was blasted by European Central Bank president Mario Draghi.
“No member state can introduce its own currency; the currency of the euro zone is the euro,” Draghi said of the concept in September.
Korjus said that, while Estonia would “never provide an alternative currency to the euro, … it’s possible that we could 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 fiscal use case for the token would require banks to move money in and out of the scheme, according to the post. However, once on the blockchain, “community-based value exchanges could take place globally for free.”
“All that is required is a digital wallet and the commitment of government to buy back every euro estcoin for one euro,” according to Korjus.
Since it was originally announced, the estcoin scheme has been both praised and criticised as “a solution looking for a problem.” While acknowledging the latter view, Korjus said:
“Since the estcoin proposal was made, we’ve been carefully reading and listening to feedback from around the world. As a result, we do now have a better understanding of not just how estcoin could be structured, but also why people would want to hold them.”
Estonia image via Shutterstock