Multiple countries around the world have been looking into the idea of issuing a national digital currency. That would involve a central bank issuing digital money using a blockchain-like system. One country exploring such a program is Estonia. This is an interesting option that was recently proposed by the managing director of the Estonian e-residency program. Estcoins will be issued through an official ICO, which makes the whole ordeal even stranger.
Estcoins Sound Interesting but can they Work?
National digital currencies have always struck me as unusual. Most people have come to know digital currencies as solutions which successfully bypass nation borders and provide financial services to anyone in the world. Thinking of central banks issuing their own digital currencies is not all that appealing to the average cryptocurrency enthusiast. Introducing an element of centralization in the world of digital currencies will always be unusual.
On the other hand, the concept of creating a national digital currency is not a privilege reserved for central banks. As it turns out, the managing director of Estonia’s e-residency program feels the same. His proposed currency would effectively serve as a national digital currency for Estonia. This is an interesting idea, although the coins will not be issued in the traditional sense. Instead, an official cryptocurrency ICO will issue these coins to the public.
Estcoin does hold certain benefits, especially for Estonia and all its international e-residents. It would result in a major digital investment fund raised through the world’s first government-supported ICO. Up until now, governments have not shown any interest in the concept of ICOs. It looks like that will change in the case of Estonia. The project has also received positive feedback from Vitalik Buterin, the co-founder of Ethereum.
One thing the Estonian e-residency program lacks right now is its own dedicated currency. Estcoin could certainly fill this gap in the near future, assuming its ICO occurs and is successful. Such an ICO would certainly create a strong incentive alignment between the country’s e-residents and the fund itself. It is unclear how these coins would be issued after the ICO, as there may or may not be a blockchain involved. Clearly some details still need to be worked out.
Additionally, one has to question how the money raised during the Estcoin ICO will be spent. One option revolves around using the money to invest in both public and private ventures moving forward. Considering that Estonia is thoroughly focused on digital services already, issuing a native digital currency makes a lot of sense – that is, assuming the tokens will have a use case in the first place. Right now, this entire idea is still largely in the proof of concept stage.
All things considered, there is much to like about Estcoins. It makes a lot of sense to complement the e-residency program already in place. One country has to be the first when it comes to issuing a national digital currency, and it might as well be Estonia. The country already has government-issued digital IDs in place, which makes the leap to Estcoin a lot smaller than most people may assume. For now, it remains to be seen if Estcoin ever becomes a real thing, but it is certainly possible we will see this project come to fruition in just a few months or years from now.