Estcoin and the Advent of the National Cryptocurrencies
As strange as it may seem, national cryptocurrencies are apparently the next blockchain industry fad. Several countries are considering the introduction of national blockchain-based virtual currencies, to compete with Bitcoin on one hand and to simply keep up with the times on the other. The mere fact that the idea is mulled over by nations such as China, Russia and the UK, lends credence to the concept that the future of currency is indeed blockhain-based. Though the above said nations are merely in the investigative stages of their flirting with national cryptocurrency, Estonia has already drawn up concrete plans to introduce virtual legal tender.
Called Estcoin, this new altcoin enjoys the backing of Ehereum mastermind and Bitcoin enthusiast Vitalik Buterin, who will apparently be actively involved with it. As a matter of fact, Buterin has already provided feedback on the Estonian cryptocurrency initiative.
According to some, Estcoin, planned to be launched through an ICO, will fit in well with Estonia’s e-residency ecosystem, which offers non-Estonians a digital ID, through which they can gain access to facilities like payment processing, banking and taxation in the country. Hailed as the first step towards a truly borderless, digital world, e-residency would indeed be well augmented by the introduction of Estcoin into this digital ecosystem.
While at face value, the Estonian initiative in particular and the various other national crypto-currency ponderings in general, are positive, at closer inspection they do not make much sense for true digital currency connoisseurs. In fact, the whole concept of a national digital currency squarely flies in the face of everything the founding fathers and current supporters of Bitcoin have held dear.
First of all: digital currency was conceived to be a global payment solution. A national currency will obviously be local in nature, and – according to most experts – it will most likely never be able to go global.
Secondly, digital currencies such as Bitcoin, have always touted their decentralized nature as one of their main draws/advantages. With a national currency, the government of the issuing state would obviously have to approve it all, and it will have to exert control over it. It Bitcoin’s wake, who in their right mind would want to become the user of such a currency?
The semi- (or entirely) anonymous nature of the currency would go right out the window as well. The issuing government will obviously want to make money laundering impossible, but it will also want to be able to closely follow every single transaction from the blockchain, to make 100% sure no tax evasion of any nature can ever occur.
From anonymity, this would take virtual currencies straight into the nightmarish realm of absolute control, with Big Brother being able to pull one’s all-time earning/spending records from the blockchain, at the blink of an eye.
Above and beyond the problems pointed out above, some experts think there are other problems with the Estonian digital currency effort too. As it currently stands, the country is apparently looking to outsource all the work tied to the estcoin project. Buterin himself is Russian, and his brainchild/pet project, Ethereum, is the virtual currency currently weighed by Russia as a potential national virtual currency.
All this obviously poses massive sovereignty issues, as by relinquishing control of the code, the Estonian authorities would effectively relinquish control of their new national currency too. The national currency still considered the cornerstone of sovereignty by most practical-minded countries, this way, the Baltic nation would effectively cede some of its sovereignty as well.
Another major factor cited by some of the detractors of national digital currencies is the existence of Bitcoin. The simple fact that it represents a better alternative to such national coins, makes Bitcoin the 800 pound gorilla in this equation. Who would want to use a payment method controlled by a government and requiring its advance permission to use, when there’s Bitcoin?
Furthermore: exactly what need would a national virtual currency fulfill, that’s not already better fulfilled by Bitcoin?
At the end of the day, this sudden surge in interest for national virtual currencies may be little more than wishful thinking on the part of state officials looking to draw the market under their control. That ship has probably long set sail though…