Estonia is looking to drag the euro into the crypto age — and tame the volatility plaguing bitcoin and its peers — by creating a digital token backed by the single European currency.
Cryptocurrencies have been on a rollercoaster ride recently, with bitcoin swinging from $10 000 to nearly $20 000 and back in under two months, and volatility is a major hurdle to their widespread adoption for electronic transactions.
One way to counter this would be to issue digital versions of an existing currency, but an initial proposal by a government agency in eurozone member Estonia was torpedoed by European Central Bank chief Mario Draghi last year.
Nevertheless, Kaspar Korjus, managing director of the Estonian government’s e-Residency global digital identity programme, is back with three new proposals to create an “estcoin” digital token that “doesn’t necessarily” break ECB rules.
His three models for creating an “estcoin” would use the blockchain technology behind bitcoin and other peer-to-peer payment systems.
Blockchain experts argue that one of the proposals could pave the way for the European single currency to be used on a blockchain platform, but forex analysts are sceptical.
Estonia, the birthplace of Skype and digital global money transfer site Transferwise, is something of a pioneer in shifting government services online. And it also seeking to make it easier for businesses to operate.
Korjus’ e-Residency programme allows people worldwide to open businesses in Estonia — and hence the European Union — and manage them remotely, declaring taxes and signing documents digitally.
More than 4,000 businesses and 28,000 individuals have signed up to the scheme since it was launched in 2014.
All three “estcoin” proposals would be tied exclusively to the e-Residency programme.
In the first, Estonian e-residency holders investing in the programme would be rewarded with estcoins.
In the second, “estcoins” would be tied to a user’s e-Residency identity and used for “digitally signing documents, logging into services or enforcing smart contracts.”
In both of these versions, the estcoin’s value would depend on its usefulness on the blockchain, and would not be pegged to the euro.
