Estcoins – Official Cryptocurrency of Estonia

Estonia Enters The CryptoCurrency Game With Its Estcoins For Bringing Upon Nationwide Benefits

After the Venezuelan Petro backed by oil barrels, it is time for Estonia to come up with its indigenous crypto Estcoins. Announcement of the same was made in the year 2017. The initial purpose and structure of this cryptocurrency is yet to be decided upon. It might take the shape of a free to be traded digital token such as the cryptocurrency market leader Bitcoin but definitely will not shape up as a currency. It can also function as a token which will help investors in verifying their identity cryptographically or even when fixed to the value of euro. Thus it will not be very different from the concept of Utility Settlement Coin. The ICO proceeds of Estcoins shall be earmarked against “the development of [Estonia’s] digital nation” by making its e-residency programme, “the best opinion globally for launching a trusted ICO.”

Various countries have joined the race of launching their exclusive crypto token. Japanese banks have already received backing from its central bank to come ahead with J-Coin, Sweden is toiling hard with its E-krona project and a discussion paper had been produced by the Bank of Canada to explore the possibility of launching an exclusive crypto.

However, the intentions of Estonia can surely be deemed to be the most sovereign. At the same time, certain countries are viewing this exclusive line-up as a means to circumvent the stringent international regulations. Russia is considering the prospects of bringing upon CryptoRuble which it believes shall be “a useful tool to get around international sanctions.” In a way, similar to the Utility Settlement Coin, most of these options will require a collateral in the form of fiat currencies which shall be held by the central bank. The money supply would remain same as for every token released a certain quantum of money shall remain locked away in the central bank’s reserve. Similarly it was in news that Dubai also plans for it’s own cryptocurrency called Em-Cash

Estonia is planning to take up the fund-raising task by adhering to the ICO mechanism which is also the cheapest form since tokens do not pay any interest. A run of tokens is created by issuers of ICO on a distributed ledger which are thereafter sold off to general people in exchange of money. Apart from being used as a fundraising mechanism, cryptocurrencies are supposed to have a further purpose. The token sold can be used for availing a certain service in the decentralized platform. Compared to venture capital funding, start-ups have resorted to the ICO mechanism for raising the requisite corpus in 2017.

A sovereign can create a useful cryptocurrency in a way which cannot be matched up by a start-up. For example, if a certain country passes a regulation asking people to pay their taxes using cryptocurrencies then this would create a ready demand for the digital tokens which will bring along efficiency in savings. Once the new digital currency takes shape, the government can facilitate every financial transaction by rendering an instant settlement facility. But these advantages are limited only to the government given their centralized structure and sovereign power.

The utility of purchase does not matter in ICO dealings at present. Investors most take up speculative decisions fueled by market sentiments. Irrespective of the form taken up by the token or putative purpose promised, cryptocurrencies are purchased by everyone with the sole aim of ringing in profit figures in days to come. Speculation is mostly done in regards to the expected demand rather than on the expected utility of the network or service pegged against the token. Regulators have issued ample warnings time and again about the risky investment behavior of cryptocurrencies and have even started imposing bans in several parts of the globe on its dealings. Investors are getting lured to the crypto craze especially because of the ‘fear of missing out.’ But once inflows arising out of the same stop churning out lump sum figures, the price of these virtual tokens can crash leaving the investors drowning in a flood of loss.

Estonia feels that Estcoins is the ultimate “solution looking for a problem.” The government can surely retrofit it by making use of a proper function. Otherwise, Estonia will surely promote the e-residency program and raise enough cash for luring in tax-paying start-ups.

Also Read: Bank Of England Could Launch It’s Own Bitcoin Styled Cryptocurrency

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Tarunima Ghosh Laha is a Finance Post Grad from St. Xaviers who believes Finance is more than just Balance Sheets and Ledger creation. This filmy bookworm who believes she was a sloth in past life also nourishes a penchant of owning a private zoo someday. Equipped with a laptop and online Lexicon she is all set to give finance a glamorous makeover in the form of exciting writeups with bang on info and flashy new words.