Estonia is moving closer and closer towards the potential launch of its own national crypto token – “estcoin”.
Kaspar Korjus, managing director of the country’s e-Residency initiative, published a blog post today where he discusses three possible use cases for the token that have been arrived at since the concept was first aired in August. The concept quickly became highly popular as speculation swirled that Estonian government could be the first to have its own dedicated digital currency.
Korjus also discussed different ways in which the estcoin could be used and how the e-Residency program could serve as a basis for conducting ICOs within Estonia.
The first use case would be a “community estcoin”, which is aimed to help Estonia develop into a “digital nation” where people are stimulated to “apply for and make greater use of e-Residency”. Methods to stimulate people to do this include reward schemes paid out in estcoin, encouraging businesses to adopt the token and also “encouraging investors and entrepreneurs to use e-Residency as their platform for trusted ICO activity,”.
A second use case for estcoin would be to implement it into a government-issued digital identity verification. Korjus indicates that 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,”. He also mentioned that this would not raise revenue for Estonia, “but merely contribute to the maintenance of the network,”.
Its third use is an unusual one and was highly criticized by European Central Bank president Mario Draghi. This would involve pegging the token to the price of the euro, and Draghi said of the concept back in September that “No member state can introduce its own currency; the currency of the euro zone is the euro,”.
Korjus response was:
“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.”
Additionally, this third use case of the estcoin would mean that banks have to move money in and out of the scheme, but 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 its original announcement, the Estonian token has been both praised and criticised as a “solution looking for a problem”. Korjus stated:
“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.”