Estonia is planning to launch Estcoin
medium.com
medium.com
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).
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.
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
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.
Being able to have a business address within the EU when you live without the EU (and if your business is small you may not have the chance at all to get an address within the EU)
It’s useful to some people to be able to create a company not tied to a particular location. For example, UK citizens generally can’t operate a UK company if they are not resident in the UK.
So, if you’re a digital nomad type, you’re scratching around to find a jurisdiction where you can run your company and moving around.
There are a few options. But Estonia is in the EU, the tax situation seems reasonable and they are positively welcoming. So, this is one problem that was solved.
I guess they could have just made it easier to start companies, without the e-residency. But being tied into the same ID system seems to make managing the company easier.
I thought that it is years since you can have an UK "business" address and incorporate a company remotely (example):
https://www.rapidformations.co.uk/blog/can-a-non-uk-resident...
Needed papers may be much more than what is needed for Estonia, and most probably taxes/fees will be higher, so that Estonia may be a cheaper solution, but it is not like it is a "brand new concept" unavailable before.
Having zero corporation tax on non-distributed fund in Estonia also seems nice.
I wouldnt say UK is much harder.
Disclaimer: I am this nomad type, and i went with UK
People are looking for such solutions to avoid taxes or currency controls. The e program brings the taxes but not the solution. So it is worse than useless. It has tax implications without bringing anything to the table. Worse, you’ll be bound to the EU regulation.
That explains why it failed miserably and shady internet banks and crypto exchanges attracts millions.
Estonia literally needs to make amendments to their constitution for this to work, yet they refuse to believe it yet. They also need to create actual incentives for people to create their company in Estonia (labour related taxes as pretty high there), as well as work out all the remote banking related issues (banks not wanting to open accounts unless you show up in-person).
> 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.
World = US empire
Some highly generalized social group = perceived leader of previously mentioned social group.
It's only as a matter of course that in any economic union such a force would have significant heft.
Anyone that isn't happy with that can and should improve their export game.
But, you simply can't argue with German productivity! Or the general quality of the goods they produce, and when it comes to getting good value groceries around Europe again it's the German supermarkets that are leading the way.
There is a problem to solve with regards to how German economic activity is balanced with the social needs of the European area. My personal bug bear is how the peripheral nations are expected to foot the bill of maintaining the periphery themselves, while Germany sits cosily in the centre printing Euros for herself.
But at the foot of Germany's success is doubtless her ability to manage her economy better than most, investment in education and to her fostering and nurturing of talent both home grown and from abroad.
By producing cheap copies of established branded goods?
No I just think that it's all down to the fact that they're better at business.
The weakest of these German chains is in my opinion Lidl, but I'd prefer to go there than the Tesco I have around the corner any day!
The weakest of these German chains is in my opinion Lidl, but I'd prefer to go there than the Tesco I have around the corner any day!'
I agree the German supermarkets seem to have better management, that which is visible at shop floor level anyway, for sure.
I don't like Aldi and Lidl because the checkout process is so rushed and chaotic. Obviously, some people don't mind and see it as a fair trade-off?
I don't like rushed for the weekend food shopping. Monday - Friday 12 o'clock shopping needs to be rushed though and since you don't have much, I prefer Aldi before REWE. Especially because it's cheaper too.
It's fascinating to see how that is sold to the population, in the middle of an export boom, and very low inflation.
My opinion how digital money should be used for debt-free tax-free money to pay e.g. a UBI: http://lustysociety.org/umi.html
If you had visited the web page you would know that the content was quite long for a comment and the formatting would disappear.
If you were an academic or a regular internet user, you would know about the virtue of references.
You are free to discuss the topic.
At least I know why I was downvoted instead of getting a sensible reply. Thanks for that explanation.
It stems from you wanting everyone to use the website the way you want them to instead of the way they want to. In the example instance the powers that Be have explicitly stated it’s okay but as far as i know have not commented on the behavior in question.
You can check my comment history to see i never post links but I also have no issue with the behavior. The person has put a lot of effort (compared to a forum post) discussing their take on a topic and decided it’d relevant and of interest to the discussion at hand.
If you don’t want to digest information that way it’s easy to ignore it and engage only on site commenters. For those of us who like in depth analysis that can’t be conveyed in a short forum discussion will click through and continue the discussion after.
I enjoy reading through linked blog posts (both in the submissions and comments) but as I commented elsewhere in this thread its the laziness of not engaging at all and simply throwing out a link to your personal blog that bothers me. I may very well be in the minority.
The EU is shifting. Not everyone loves todays German-ruled course of things (I'm German). This is especially true for the corridor between Baltic Sea and say Austria. These countries - Estonia as a very small one, in particular - have still to take care in how they express themselves in regard to sensible topics. Don't confuse this with non-dedication.
It is an interesting play with words but of course the European policy makers would have to have the last say, and of course it would have to abide by European regulations. As long as it does, how could they possibly have a problem with it?
> However, crypto tokens have far more significance than their > use as a currency and don’t necessarily fall into that category. >From Estonia’s perspective, estcoins were proposed as a way to raise money and support for the development of our digital nation from more people around the world. We would also want to structure the tokens so that they help build our e-resident community and incentivise our own key objective, which is to increase the number of companies started in Estonia through e-Residency.
Don't just take the things you want to hear out of context from the original meaning. Founding more Start Ups in Estonia is a valid use case. It's also a way to fight poverty.
But ultimately denominated in Euros, right? Otherwise this is just "yet another crypto currency".
I'm pretty sure the country wouldn't be allowed otherwise, to set up a parallel economy with its own exchequer besides the ECB?
OP argues that Estonia is a member of the EU, and is therefore bound to use the Euro and only the Euro as its national currency. It seems a bit sneaky and underhanded then to launch this cryptoCURRENCY as a "token" rather than a currency.
As someone mentioned further down, estonia probably won't make estcoin a legal tender (can't be forced to accept estcoin to settle all debts in court or pay taxes), avoiding the issue of competing directly with the euro while still allowing the government to play with this new tech.
Just a nitpick, this statement isn't quite true.
>Nine countries (Bulgaria, Croatia, Czech Republic, Denmark, Hungary, Poland, Romania, Sweden, and the United Kingdom) are EU members but do not use the euro. [1]
The term you are looking for is the Eurozone rather than the EU.
[1] https://en.wikipedia.org/wiki/Eurozone#Future_enlargement
I won't provide a separate source for this statement since it's the same as yours, just a few sentences further down.
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).
What, exactly, does “bailing out individuals in distress” comprise?
The main reason not to do this is because that would usually mean severe distress for many employers whose working capital would be lost and day-to-day business disrupted, possibly (especially during an economic downturn) bankrupting them; causing a ripple throughout the economy as a major bank going down takes down also many unrelated companies, their employees, their suppliers, etc, and possibly toppling the next weaker bank(s) as well.
Cryptos are good for reasons other than whatever macroeconomic theory is built into bitcoin. They're digital. That's useful. The digital economy needs better ways of moving around money. At present, if you want to run a digital "market" where money goes in and out it must be "thick". Chargebacks, fraud & transaction costs will add up to 5%. That means thin or fast are not options. For thin and/or fast (eg online securities trading or currencies), they need to already have all your money or trust that you'll pay. That's why you need an account with a brokerage. In other words, there is no digital cash.
How do you build a patreon without a "man-in-the-middle?" Can Estcoin do it? How do you trade currencies without some random institution holding your money. How do you do micropayments.
I think we need a separate bitcoin for building stuff on, away from the crazy currency trading. Government backed seems like a good way to go. I'd even recommend a central bank, just call it something less scary.
Edit: I don't get the downvotes. If people like the bitcoin "macroeconomic theory," that's great. You have bitcoin. Why can't we have 2?
There was a period of relative calm between the instantiation of post-1929-crash banking regulations and the repeal of Glass-Steagall (Gramm-Leach-Bliley) and the deregulation of derivatives (CFMA) in the late 90's/early 2000's. Perhaps finance is better understood than is recognized.
The truth is that crashes are cyclical... for reasons that are poorly understood. There are probably ways to manipulate cycles, but eventually human psychology takes over and people start acting irrationally en masse. What we can do, I think, is focus on how we respond to down turns.
[0] https://www.theguardian.com/business/2008/oct/24/economics-c...
Sensible regulation will buy us a lot, but you can't prevent people from doing big stupid things forever.
What period was that, exactly?
You do realize that Estonia, just like any other EU country, is part of the leglisative body that creates those rules and regulations?
Also in the context of present-day Europe, with a lot of successful extreme right eurosceptic parties, the term "oppression" associated to Europe rules is a lot more politically loaded. A bit like "Democrat" in the US does not simply mean someone that likes democracy.
(Also, like a sibling wrote, being part of a decision process doesn't mean that you ultimately agree with all majority decisions, but whatever.)
"Democracy is the idea that the people know what they want and deserve to get it good and hard."
That being said, if a token has a central issuer, there’s no need to use any form of blockchain technology — digital signatures alone will suffice (add Chaumian blinding to make it more cash-like).
Every EUR the government hands you (in EU not by a check, that's stone age, but on your account) is directly, immediately covered from their reserves (usually within 'their' central bank, who also can't issue new euros) or borrowed from someone, possibly the ECB.
TIL of Chaumian e-cash and blind signatures.
[0] Chaumian e-cash:
https://bitcoin.stackexchange.com/questions/9544/how-does-ch...
[1] Blind signature:
When 10,000 people get their salaries in it, then we can talk about EU-level issues. Meanwhile, let em play.
I'm generally pro-eurozone and I have no problems with this. If they figure something good out, they can share with the rest of us. Ideas like this are not going to come out of Brussels.
Go Estonia!
An extremely poor country outside Tallin (according to a single documentary I've watched), they went tech to try to thrive as a country.
Takes some balls, it's either that or tax heaven (which is something I think _my_ country--Italy--should do), they went the hardcore route.
Why is it ridiculous for a small EU nation to pay lip service to EU regulations with regard to this financial experiment? What would be a better way to do what they're doing?
They admit in the article that it’s a solution looking for a problem, which is a good strategy for creating problems for no reason.
Many people [...] wondered if the whole thing was nothing
more than a marketing stunt for the e-Residency programme.
For example, instead of mining, what if only Estonia could generate estcoin? What if Estonia only sold them via Euro, and promised to pay Euro on a 1:1 basis to anyone who sold them back to Estonia?
Can any Europeans here chime in with their perspective?
The Brutish government is currently getting raked over the coals in negotiations, which serves as an almost daily reminder of the EU's value for member states. Escaping the terrible oppression that is the European Court of Justice, which I just now failed to find any controversial judgement for, appears to be acceptable after all, if it allows your airlines, banks, and software companies to freely do business in the world's largest economic area. Who woulda thunk?
Brexit has also had a unifying influence on the rest of the EU: Surveys show trust in the EU at a 10-year high. Almost more importantly, trust in the EU has for 20+ years been higher than trust in the respective national governments and parliaments. See http://ec.europa.eu/commfrontoffice/publicopinion/index.cfm/... (page 15).
With the elections in France, the Netherlands, the UK, and Germany, anti-EU populism has arguably shown to have passed its peak–a President Trump actually being rather helpful in this regard, thx.
One of them is not even tradeable and another would be pegged to Euro. The third one (community estcoin) is more like your typical token but even then, I would be quite surprised if EU would actually put the brakes on the ICO.
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 for example.
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
If you read the first news about estcoin they used the term 'cryptocurrency', now the use 'crypto token'.
Some countries want to take their sovereignty back.
Sneakily creating their own currency could be step 1.
Or at least, they care in the area of having their own currency.
This is not all or nothing.
It is perfectly possible that they are fine with some regulations and want to take back control in other areas, as they seem to be doing here.
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.)
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.
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.
FTFY
It absolutely is a battle we can win.
Wikipedia says Taavi Kotka was a driving force. Does anybody happen to know if he's on HN?
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.
The central organization can scale the infrastructure much better than something decentralized, with the end benefit of the blockchain being that the data in it can not be changed like you could if it was just fields in a database.
We need a good name for a software product like that ... something like ... Global ... Information ... Technology. Think that'd work?
The only centralized part would be the issuing.
Blockchain is completely different than a decentralized proof of work algorithm, and I am not sure why everyone always confuses the 2.
If the blockchain was just the transaction ledger, great. But it’s not.
Sure there is! E.g., in the SSL Certificate Transparency system, each CA maintains a certificate log that is essentially a blockchain. And even in the context of cryptocurrency, a centralized blockchain at least prevents the central authority from secretly issuing currency and lying about how much has been issued.
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:
How is that supposed to work? You do not fully own crypto tokens unless you and you alone hold the private keys.
You can imagine, for example, that your tokens would be owned by a smart contract controlled by your e-Residency, so that as long as you can present a currently valid e-Residency, you can access the tokens.
Presumably you could also transfer those tokens to a non-e-Residency address, and forfeit the convenience of the state identity.
Of course this also means that the government could seize your coins.
This may have led people to believe the government just sat on this information, but I don't think this is the case. Thanks to quick acting from everybody involved (aside from Gemalto it seems...) no real downsides existed aside from people having to renew their certificates and PIN numbers, which was no real hassle.
- https://cointelegraph.com/news/owner-moves-bitcoin-exchange-...
- https://www.reddit.com/r/Bitcoin/comments/4efdam/estonia_now...
Anyone more familiar with the situation have any thoughts on this? This seems contradictory to what they are trying to do.
A sort of “We are pro change, as long as things stay the same.”
* 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...
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).
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.
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?
That's just false. Eurozone and the EU overlap, but they aren't the same. UK has its pound, Switzerland uses francs.
... and UK soon won't be anymore.
Denmark is a better example:
https://en.wikipedia.org/wiki/Enlargement_of_the_eurozone
And there is of course the "curious" situation of Sweden:
Also note that the article doesn’t claim the euro as essential feature for every country’s EU membership, it just says it’s essential for Estonia.
This is the strategy of Sweden, for instance, to retain the crown. If Sweden were to meet the criteria it would have to adopt the euro, but it never needs to show that it does meet the criteria, so it can keep its own monetary policy.
(I live in Finland, and while I think euro is personally convenient for me, it has been very bad for my country's economy).
'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...
Tom Scott on electronic voting: https://www.youtube.com/watch?v=w3_0x6oaDmI
How do you know that it was successful? I'd say that, in order to be successful, an election must ensure that (1) the votes are accurately counted and (2) the voters aren't bribed or coerced w.r.t. their votes. Traditional voting at polling places ensure this by having voters mark their ballots in secret and keeping the paper ballots available for a recount. I don't see how it is possible to provide either ballot accuracy or ballot secrecy if voters can vote on insecure (possibly malware-infected) computers in an uncontrolled physical location (possibly being watched by someone bribing or coercing them to vote a certain way).
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.
https://en.wikipedia.org/wiki/The_Corrections
(If you haven't read this, stop everything you're doing and go find a copy)
[1] http://news.err.ee/616732/potential-security-risk-could-affe...
There are three separate ideas for what estcoin could become.