Estonia proved how blockchain technology can help a nation grow

The Digital Republic has set an example of how rapid digitisation can benefit a nation’s growth
  • The initiatives of Estonia has helped the small country to create a large digital impression in the world
  • Being a digital society, the country is surrounded by cyber threats, although it can help other countries by providing the blueprint to create such a digital society
  • Estonian economy runs on the KSI blockchain
  • Although the country doesn’t consider cryptos as legal tender, it believes such currencies are the value represented in digital form

Estonia, an Eastern-European country, has embarked on massive technological innovation by embracing technology and the internet. The country advances a digital economy and is also known as The Digital Republic. In the country, a vision of the future lives with the community. E-Estonia is one of the leading ambitious projects of the government, backed by Taavi Kotka, the country’s chief information officer. The e-Estonia project is wiring up the nation’s several sectors in one digitally linked platform. Such industries and services include legislation, voting, education, health care, banking, taxes, etc.

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How Estonia became a tech-savvy country?

Despite being a small country, Estonia has now made an enormous impression on the global frame. It is known that 99% of the country’s public services are now available 24/7 on the internet. Services like paying taxes and voting in the country are completed online under minutes. For world governments who wrestle with digital challenges, this tech-savvy country can provide a blueprint for building a digital society.

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Since Estonia gained independence in 1991, the country went digitally to modernize its economy. Everything began after the government pledged to put a computer in every classroom and make all the schools online. Moreover, the government started offering free computer classes to 10% of the adult population. This momentous effort helped the country to gain the percentage of citizens who use the internet from 29% in 2000 to 91% in 2016.

Education helped the citizens to realize that businesses and other things were going to move over to the internet. Thus, the government planned on creating an online system to replace the existing offline ID card. In 2002, the small country launched a high-tech physical national identity system. The ID cards paired with digital signatures are still being used to pay taxes, vote, do online banking, and maintain one’s personal health care records. However, according to Kotka, if everything is digital in a country, it can run borderless.

Cyber threats always surround a digital society

The journey to becoming a digital society was not that easy for Estonia. In 2007, the nation faced a massive cyberattack that destroyed its digital structure. But that helped the country to become the home to the NATO Cyber Defense Centre of Excellence. The organization conducts large-scale cyber defense drills. Still, the officials were forced to respond to more than 10,000 cyber incidents in 2017. The government of Estonia claimed that being a digital society meant that they would always be surrounded by cyber threats.

Does the country embrace cryptocurrency and blockchain?

The Digital Republic has chosen the KSI blockchain technology to run its online services. Moreover, NATO and the United States Department of Defense also use the same ecosystem. It is known that no data is stored on the blockchain, which can scale to offer immutability for Petabytes of data each second.

The Estonian government has not legalized any cryptocurrency but considers such currencies as values represented in digital form. Indeed, crypto payments are allowed in the country. On the other side, the country’s government classes virtual currency as digital assets for tax purposes but does not subject such currencies to Value Added Tax (VAT).

However, in 2017, Estonia was not giving crypto licenses. In 2020, the country’s new regulation brought one license regarding cryptocurrency to the nation. In a recent interview with The Coin Republic, Mardo Soo, the founder of Consulting24, a crypto consulting firm in Estonia, explained what this license is used for. According to Soo, the latest license is for offering cryptocurrency services in the country. The license covers crypto to crypto, crypto to fiat, and fiat to crypto. Additionally, Soo mentioned that anyone could start their digital assets exchange under the license, sell Bitcoin using credit cards, issue their own crypto coin, and open banking accounts. 

Estonia is also known to benefit new startups, as the country imposes a 0% tax on reinvested profits. The lack of taxation (since it’s 0%) is expected to help the new crypto startups to generate profits and reinvest to grow their business operations. However, following the current scenario, it seems like now everybody wants to start in The Digital Republic. 

It seems like the Estonian government has taken a unique and promising road where other governments were attributing more value to the country borders than to entrepreneurs. Estonia’s rise as a digital republic is only a testimony to the growing popularity of a digitalised ecosystem. With many more far thought schemes soon to be launched by the country’s government, Estonia is clear to make its mark on a rapidly digitalised world economy.

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Ahtesham Anis
Ahtesham Anis is a Computer Science undergrad student currently based out of India. Coming from the business background and his keen interest in Cryptocurrency and Blockchain technology is what Ahtesham brings to the table. He is always an eager learner when it comes to exploring the new technologies and topics in the crypto world.

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