
Estonia is planning to launch Estcoin - madspindel
https://medium.com/e-residency-blog/were-planning-to-launch-estcoin-and-that-s-only-the-start-310aba7f3790
======
jaclaz
>Since the proposal was published, I’ve been repeatedly asking audiences if
they would be interested in purchasing estcoins and the response is a
resounding yes, even if they are not always sure why yet.

Would it be offensive to hint that maybe -just maybe - audiences were
(largely) clueless?

>You might be surprised to hear this, but we completely agree with the
criticism that estcoin is a solution looking for a problem. However, that is
not necessarily a bad thing.

Very clever argument, though:

>E-Residency was also a solution looking for a problem when the programme was
launched. The solution was to enable anyone in the world to apply for an
Estonian ID digital ID card and then gain access to our e-services, but even
many of the first e-residents were not sure what problems this would solve for
them. Three years (and almost 30,000 applications) later, we now have a very
good understanding of the problems that e-Residency solves by helping
democratise access to entrepreneurship globally and enabling the rise of
location-independence.

I still completely fail to realize which actual problems were solved by
e-residency (setting aside some good money going to Estonia).

~~~
Shoothe
> I still completely fail to realize which actual problems were solved by
> e-residency (setting aside some good money going to Estonia).

It's still not exactly clear what money would go to Estonia. I'm no tax
advisor but reading previous threads indicate that even if you incorporate a
company in Estonia but solely operate it from another country that has tax
treaties with Estonia (and many do) you still need to do your taxes locally,
not in Estonia. So except the fee for the card and processing company
application there are no big money to be made here.

~~~
jaclaz
>So except the fee for the card and processing company application there are
no big money to be made here.

Well, even that is not trifling, when you make due proportions.

The population is 1,350,000 roughly, the 30,000 (till now) e-residencies at -
say - 100 Euro each (state fee only) are 3,000,000, if everyone will register
a company that will be another 230 Euro, i.e. 6 or 7 millions, then you will
have some yearly fees (for keeping the books, etc., etc.) and possibly some
other service fees like (example):

[https://www.leapin.eu/faq/cost-and-fees](https://www.leapin.eu/faq/cost-and-
fees)

Let's say 1,500 - 2,000 Euro/year as "basic" costs that will go to either the
Estonian government or to Estonian firms/individuals.

If the whole thing will generate a direct and indirect income of
30,000x2,000=60,000,000 that will be 50 €/citizen, not that bad in a country
where the average salary is around 13,000 Euro/year.

And this is in the hypothesis that no actual transaction is done by any of the
30,000 firms, surely _something_ will be generated (and some part of it remain
in Estonia) by them.

Of course these are only guesses, but - unless there are some favourable tax
"workarounds" or however lower taxes - there are very few reason that I can
see why one would want to establish a "virtual" company in Estonia.

Most probably the people that will be interested in it are non-EU and coming
from countries that _somehow_ have no tax treaties (or whatever) and that
(still somehow) will have some advantage.

It is the "somehow" and the actual "advantages" that are not clear to me.

~~~
nileshtrivedi
The fee used to be 50 EUR which they had to double because of growing demand.

------
tom_mellior
I love this part:

> Estonia’s only currency is the euro and this is an essential feature of our
> EU membership, which we are proud to have. No one here is interested in
> changing that.

OK, great. Next sentence:

> That’s why we have always referred to estcoin as a proposed ‘crypto token’.

(top highlight!) Wow, clever! It's not a currency! Oppressive EU regulations
(that we agree with and are not interested in changing) have been obeyed. Next
sentence:

> Governments do need to consider the disruptive impact of how crypto tokens
> can be used as currency

Hahaha. Sorry, but this "we're launching a currency that we don't call a
currency but that everybody, including us, knows is meant to be a currency
<wink>" is ridiculous.

All that said, I think issuing some sort of government-backed currency might
be one way of experimenting with implementing a universal basic income, in
order to combat poverty among your citizens. But I don't see that discussed in
the article.

~~~
kome
> All that said, I think issuing some sort of government-backed currency might
> be one way of experimenting with implementing a universal basic income, in
> order to combat poverty among your citizens. But I don't see that discussed
> in the article.

It's funny, because we already have a "government-backed currency" but we
prefer to bail-out the banks instead of bailing-out individual in distress...
I mean: it's not a problem of technology, it's the lack of political will.
Crypto-currencies are not different from any other type of currency in this
respect. I don't see why they are better fitted to implement a Universal Basic
Income. I perhaps see reasons why they are worse than actual money
(technological divide, lack of acceptance in shops, difficult to understand).

~~~
runeks
> It's funny, because we already have a "government-backed currency" but we
> prefer to bail-out the banks instead of bailing-out individual in
> distress...

What, exactly, does “bailing out individuals in distress” comprise?

~~~
tomrod
I would imagine the standard social safety net: food, unemployment insurance,
parental leave, and so on.

------
logronoide
Launching a crypto to compete against Euro sounds bizarre for a country that
needs to reinforce its European membership against the Russian threat. They
need to be as close as possible to the core of the EU.

But I really like the idea of a community estcoin to boost the adoption of the
e-residence and all the services around. A very interesting side effect of an
ICO is how the buyers become instantly in evangelist of the service/solution
provided by the company backing the offering. I think the 'community effect'
is key for a successful ICO, that's why I like offerings like
[https://www.tutellus.io](https://www.tutellus.io) for example.

~~~
Falkens_Maze
> Launching a crypto to compete against Euro sounds bizarre

When did they specifically say Estcoin was to be used as a currency? An ICO
just requires you to issue a token[1].

[1]
[https://theethereum.wiki/w/index.php/ERC20_Token_Standard](https://theethereum.wiki/w/index.php/ERC20_Token_Standard)

~~~
logronoide
> Much of the criticism of estcoin was based on the fact that Estonia simply
> can’t start its own cryptocurrency even if it wanted to. Estonia’s only
> currency is the euro and this is an essential feature of our EU membership,
> which we are proud to have. No one here is interested in changing that.

If you read the first news about estcoin they used the term 'cryptocurrency',
now the use 'crypto token'.

~~~
pests
So they took feedback, made logical changes to their plan based on that
feedback... and we should fault them for this?

~~~
Dylan16807
When the change is more or less just the name, yes.

~~~
pests
The feedback was literally about the name. How else do you change the name
without... changing it?

~~~
Dylan16807
When the feedback is "hey you can't make a currency", that is not feedback
about the name, and changing the name is a questionable fix at best.

------
skrebbel
This is awesome. I think bitcoin is a bubble and ICOs are mostly scams, but I
love love _love_ how fast Estonia's government is able to iterate on stuff
like this. Truly an example to governments everywhere.

~~~
thinkMOAR
Indeed, though have to note its a little bit easier applying new things in a
country with a population of 1.3 million total

~~~
pavlov
In America, the wide independence of states is supposed to work like this:
smaller states can experiment while retaining the benefits of access to a
large common market.

In practice, it's nothing like that. At least I can't imagine Rhode Island
introducing a "RhodeCoin" on six months' notice.

Are American states suffocated by the federal structure? Maybe, but Estonia is
also a member of the EU and the Euro currency, so clearly it doesn't have to
be automatically like that. (My personal opinion is that the EU/Euro are
actually much more innovation-friendly supranational structures than they're
generally given credit for. Estonia's economic growth has much to do with
their EU membership.)

~~~
simias
I'm European but didn't gay marriage and (ongoing) weed legalization basically
work like that? First it's individual states and eventually it gets to the
federal level. Seems to sort-of work for these issues.

~~~
teraflop
Sort of, but it doesn't completely work like that in practice, because of how
heavily involved the federal government is with all sorts of things.

In fact, both of your examples illustrate this. When gay marriage was only
legal at the state level, same-sex legally married couples weren't treated as
married for the purposes of income tax, Social Security, immigration, and a
bunch of other federal benefits. And even in states where marijuana is
decriminalized, the DEA can arrest and federally prosecute you if they feel
like it.

~~~
nostrademons
Much of the point of having states experiment isn't to get everything right,
though, it's to prove that the sky doesn't fall when a new social policy is
enacted. Usually whenever any new social contract is proposed, there's an
immediate chorus of "this will lead to chaos and anarchy!", and it's only when
a policy has been in place for a couple years can people judge whether it
really _did_ lead to chaos and anarchy.

For both gay marriage and marijuana legalization, for example, certain states
tried it against a chorus of voices that said "This will lead to the
destruction of marriage as we know it" or "crime will go through the roof".
And then that didn't happen, and so other states tried it, and eventually it
filters up to the federal level.

There have been other cases where policies have been tried that _did_ lead to
widespread chaos and negative consequences, like Nebraska's safe-haven law
that defined a child as anyone under 18 and led to mother's abandoning their
teenagers because they didn't want to deal with them, or California's Prop 8
that was supposed to keep senior citizens in their homes but had the
unintended consequence of restricting the supply of housing and driving
housing prices through the roof. In these cases, the laws have not been
duplicated in other states, at least not without changing the problematic
details.

There's talk in a few states of introducing both universal health care and net
neutrality as state laws. This will be an interesting experiment, and will let
us see whether the sky does in fact fall before rolling it out nationwide.

~~~
jmalicki
Prop 13, not 8

~~~
nostrademons
Thanks. I looked it up beforehand and was like "Prop 13, not prop 8, not prop
60", and then somehow I wrote prop 8.

------
1ba9115454
It doesn't sound like this guy really has the permission of his country to do
what he's proposing to do.

He appears to be struggling to fit an ICO into his current role. It's simply a
bad idea IMHO.

A blockchain is not a good fit for an organisation that is cleary centralized.

An ICO is a way to raise funding, why does a government department need to do
that.

~~~
skeletal88
As an Estonian I have no idea what the ICO would be about, and why it would be
a good idea.

This seems to be a one man show by the author of the article. ICO-s are
popular so lets do one of our own! kind of attitude.

~~~
jaclaz
>This seems to be a one man show by the author of the article. ICO-s are
popular so lets do one of our own! kind of attitude.

Said by an Estonian this is preoccupying, Kaspar Korjus is usually presented
as an official speaker for the Estonian Government for the e-residency
program:

[https://cybersecforum.eu/en/speaker/kaspar-
korjus/](https://cybersecforum.eu/en/speaker/kaspar-korjus/)

[https://europe.money2020.com/speakers/kaspar-
korjus](https://europe.money2020.com/speakers/kaspar-korjus)

------
tromp
> Everyone’s heard stories about investors losing access to their crypto
> tokens — perhaps because they forgot their private key for example — but
> this doesn’t happen to e-residents if their wallets are linked to their
> government-backed digital identity.

How is that supposed to work? You do not fully own crypto tokens unless you
and you alone hold the private keys.

~~~
Strom
It works by associating your tokens with your identity. You're the only one
with the private key, however the identity manager (government in this case)
decides which public keys are linked to an identity.

Of course this also means that the government could seize your coins.

~~~
krrrh
It would also mean that pseudonymity is out the window. Does anyone else
remember when anonymous transactions was the _sine qua non_ of cryptocurrency
hype?

------
_up
Has someone founded an Estonian company and offers a subscription service.
Stripe is not available. And I want to use EDD for Wordpress and I could not
find a plugin for subscriptions with Braintree and I wonder why? I may program
it myself but I wonder if there may be a reason nobody has implemented it yet.

~~~
superasn
Yes, desperately waiting for Stripe to come to Estonia. Just got my
e-residency but that's my only reason for not taking the next step and
incorporating my business there. I guess the market isn't big enough yet for
Stripe to open there.

------
asenna
I like how Estonia is embracing technology. However while doing my research on
how crypto friendly they are, I came across this surprising ruling by the
Supreme Court in 2016 against a Bitcoin exchange that was forced to move out:

\- [https://cointelegraph.com/news/owner-moves-bitcoin-
exchange-...](https://cointelegraph.com/news/owner-moves-bitcoin-exchange-out-
of-estonia-after-landmark-supreme-court-decision)

\-
[https://www.reddit.com/r/Bitcoin/comments/4efdam/estonia_now...](https://www.reddit.com/r/Bitcoin/comments/4efdam/estonia_now_officially_worst_country_in_eu_for/)

Anyone more familiar with the situation have any thoughts on this? This seems
contradictory to what they are trying to do.

~~~
scribu
The apparent contradiction can easily be resolved - “We don’t want to allow
crypto tokens, unless we control them.”

A sort of “We are pro change, as long as things stay the same.”

------
diego_moita
Pros:

* virtual money with monetary policy. This could shield it against manias, panics, bubbles and crashes

* Estonia is not big enough to dream of imperialism and hegemony (hopefully).

Cons:

* scale is everything. If the Financial authorities of the U.S., China, England, Japan, Facebook, Google, WeChat or Tencent implement something like that in a global scale, it will be hard to compete.

* Mario Draghi, the "cappo-di-tutti-cappi" in the European Union says no: [https://qz.com/1072740/mario-draghi-of-the-ecb-dashes-estoni...](https://qz.com/1072740/mario-draghi-of-the-ecb-dashes-estonias-plan-for-an-estcoin-cryptocurrency-backed-by-the-government/)

~~~
zubspace
Can someone enlighten me in what way disparate digital currencies, like
EstCoin, UsCoin, SwissCoin, ChinaCoin, etc etc would be an improvement
compared to status quo?

~~~
diego_moita
Trust.

It is hard to sell a bread or chewing gum in a coin that you can't be sure
will cost 10 times more tomorrow or will be worth nothing. This is why Steam
and WrapBootstrap (among many others) gave up on Bitcoin. Most current
currencies have this volatility and instability because:

a) it is hard for them to technically adapt to scale (e.g: allowing more
transactions, changing algorithms,...)

b) the supply of money must respond to price oscillations. This is basic
monetary policy and is how Central Banks assure that fiat currencies remain
stable and reliable (well, at least is what they should do).

~~~
mastax
So then what does UsCoin get you over USD?

~~~
diego_moita
I am not American and don't trust the American government to control my money
or to keep it away from Putin or Bulgarian criminals, so it gains nothing.

But if it was implemented by a reputable government that respects privacy and
implements the convenience of most crypto-currencies than I would take it, for
sure.

~~~
mastax
To ask more specifically: what benefit does a cryptocurrency give you if you
still need to trust a central entity?

Some guesses of mine:

\- Could be easier to trade than forex (though I don't think this is currently
the case with crypto)

\- A centralized ledger may reduce the information that individual financial
institutions need to store

\- Blockchains are generally tamper-resistant databases

\- Blockchain's may be easier to police for e.g. fraud

As a consumer, most of those are 'not my problem'. What benefit do you
anticipate?

------
unitboolean
The problem is that the EU court may force Estonia to any decision they want.
This already happend with Ireland - the EU forced them to collect 13 Billions
in additional taxes from Apple even if Ireland didn't want to do this.

~~~
RobertoG
Well, corporations go to Ireland because they have low taxes and they are in
the common market. I doubt one of those alone would work.

~~~
tom_mellior
Besides the low taxes, Ireland also has the enormous advantage for foreign
corporations of being an English-speaking country.

------
bufferoverflow
> _Estonia’s only currency is the euro and this is an essential feature of our
> EU membership_

That's just false. Eurozone and the EU overlap, but they aren't the same. UK
has its pound, Switzerland uses francs.

~~~
freetonik
You're right, but Switzerland is not a member of EU.

~~~
jaclaz
>You're right, but Switzerland is not a member of EU.

... and UK soon won't be anymore.

Denmark is a better example:

[https://en.wikipedia.org/wiki/Enlargement_of_the_eurozone](https://en.wikipedia.org/wiki/Enlargement_of_the_eurozone)

And there is of course the "curious" situation of Sweden:

[https://en.wikipedia.org/wiki/Sweden_and_the_euro](https://en.wikipedia.org/wiki/Sweden_and_the_euro)

------
baxtr
I am not sure why, but it reminded me of something that happened to another
small European country a while back:

[https://en.wikipedia.org/wiki/Pyramid_schemes_in_Albania](https://en.wikipedia.org/wiki/Pyramid_schemes_in_Albania)

------
baccredited
I think Estonia will pull this off and it will be useful. Take a look at their
success with e-voting, for example. Is any other country even close to these
numbers?

'In the 2015 parliamentary elections, 176,491 people, 30.5% of all
participants, voted over the Internet.'

[https://en.wikipedia.org/wiki/Electronic_voting_in_Estonia#2...](https://en.wikipedia.org/wiki/Electronic_voting_in_Estonia#2015_Elections)

~~~
foepys
Nobody sane would want e-voting. It has exactly the same problems as voting
machines and in addition to that is heavily vulnerable to DDoS attacks and ID
theft.

Tom Scott on electronic voting:
[https://www.youtube.com/watch?v=w3_0x6oaDmI](https://www.youtube.com/watch?v=w3_0x6oaDmI)

------
CPLX
As of the current moment at the end of 2017, the prime use case for
cryptocurrencies is overwhelmingly as a tool for gambling.

It should be obvious and unsurprising to see governments attempt to join the
market and take over the most widespread forms of gambling for revenue
purposes and to regulate potential fraud.

It's the same set of incentives that caused the old mafia-run numbers games to
become state lotteries.

~~~
csomar
Completely proofless comment. I could also write the same but just remplace
“gambling” with “drugs”

~~~
krrrh
GP said, “at the end of 2017”. Drugs were the prime use case from 2011 to
2013.

------
mmartinson
This feels like it's straight out of The Corrections.

[https://en.wikipedia.org/wiki/The_Corrections](https://en.wikipedia.org/wiki/The_Corrections)

(If you haven't read this, stop everything you're doing and go find a copy)

------
slifer
e-coin was probably already taken

------
ninguem2
That is coming too soon after a major flaw was discovered in the cryptography
of their electronic IDs [1], doesn't inspire confidence.

[1] [http://news.err.ee/616732/potential-security-risk-could-
affe...](http://news.err.ee/616732/potential-security-risk-could-
affect-750-000-estonian-id-cards)

------
TekMol
No technical infos? Will this be a chain on it's own or based on an existing
chain?

~~~
pests
Idea phase, not implementation.

There are three separate ideas for what estcoin could become.

------
crimsonalucard
Amazing how technology allows people to create value out of thin air.

------
m3kw9
So a decentralized system is now centralized?

------
ryanmarsh
Oh the irony had they labeled it “e-coin” (reference to _Mr. Robot_ on USA)

------
tzahola
A centralized, nationalized cryptocurrency? How revolutional!

