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Estonia. A small country with great startup ambitions

08 November 2017 21:00, UTC
Denis Goncharenko
Bitnewstoday continues to study the world states in terms of their relevance to blockchain, cryptocurrency, and mining. This time the Baltic states got under review and Estonia would be the first one to discover. Although these countries are within close borders, each of them has got its own history of relations with crypto-world.

Estonia — an advanced tech-savvy state or is it just an illusion?

At first sight, Estonia could be called one of the most advanced countries concerning IT. Remember that it was the first state to introduce the “e-citizenship”. Still, in the cryptocurrency field, things are not so cloudless.

Though there’s nothing new: the legal status of cryptocurrency was and still is a subject for debating and arguing between the government and the crypto-society. For example, the founder of the online trade project called BTC.ee, Otto De Voogt has written several times in his blog about the pressure by the state system. All of that led to shutting down the website and canceling all operations connected to bitcoin.

In author’s opinion, the decision was made by the Estonian Supreme Court. Later the owner of the project called Estonia “The worst country in the EU to start a Bitcoin or blockchain business”. He also claimed that he was forced to leave the country to go on with the development of his business in other “more friendly place”.

This case is certainly a bad experience but quite a representative one: despite the stated friendliness to new tech and progressiveness, forums and blogs are full of discussions concerning Estonian government not “releasing reins”. People say the government is going to halt the uncontrolled spread of cryptocurrencies at its territory.

“Flirting” with blockchain — what are the results of Estonian initiative?

There’ another interesting thing — recently the Estonian government itself got an earful from Mario Draghi, the President of the European Central Bank. As it is known, the “e-Residency” project came up with the initiative to create Estcoin, the kind of a national cryptocurrency. When Mr. Draghi heard the news, he criticized it heavily. He noted that any eurozone country is not entitled to introduce other means of payment than euro. Thus, the fate of Estcoin project is therefore questionable — the representatives of the state probably are not in the mood to argue with ECB. Maybe Estcoin will appear after all but in other legal status. But certainly not as a declared “national cryptocurrency”.

Nevertheless, this precedent tells us that Estonia is fully involved in implementing and developing blockchain projects. Despite all that specific confrontations and sometimes a rigid position in cryptocurrency regulation, the country considers these technologies seriously and for good.

This year, Tallinn held Blockchain and Bitcoin Conference, one of the largest events in the crypto-world. The representatives of IBM, crypto societies and organizations, different officials were present. The ideas of blockchain implementation into the state projects were one of the main themes on the agenda. The official website of organizers of the conference has already announced the 2018 event.

How bitcoin enters the daily life of Estonians

On 2015, the tech forums and portals of the country posted news about the first Bitcoin ATM to be installed in Tallinn. The delicate question of regulation was raised again: anyone willing to use the ATM should be identified. It was certain that without this procedure the company responsible for installation and service of these Bitcoin ATMs wouldn’t receive the legal permission to work.

The usage of bitcoin and any other altcoins in everyday life is not widely spread yet. One can count on fingers the places which take bitcoin as a payment medium. Anyway, those who do, are really enthusiastic about that.

But due to the fact that the electricity in Estonia is cheap in comparison to other European countries, mining is quite attractive to Estonians — one of the largest Estonian crypto-companies develops the cloud mining technology, which is truly attractive to investments. At least, the flow of questions and comments on social media and forums say that they’re on the right way. We speak about the project called Hashflare. The HQ of the company is based in Tallinn.

Moreover, the founders of the company went further on and established Polybius Foundation to support crypto-startups and blockchain projects worldwide. At this moment, the Polybius project gathers investments and “brains” — just look through the list of advisers from different spheres. There’s a proud fact depicted on a website, that Polybius Foundation is established in Estonia. Well, there are certain reasons for that.

The rise of startups is a result of a focused government support

The fact: in 2016 Estonia became a world leader in numbers of startups per capita. And that’s not an accident. The IT world knows Estonian developers were behind Skype, which became a #1 messenger for some period of time. With that knowledge, Toomas Hendrik Ilves, the President of Estonia led his politics in creating a friendly environment for the startups. It all started back in 2006 and today, in 2017, we can certainly say that he succeeded.

For the last 10 years, the startups in Estonia invited more than 370 mln of euro investment. And a number of blockchain-based projects are surely supported with these funds. Well, probably the state regulation and supervision is not perfect yet, but the cooperation and mutually beneficial work will end up with a good result.

The leaders of the state realize that — it is also about taxes, new jobs, and a good economical stimulation. The confrontations are hard to avoid, but probably, the single unfortunate cases couldn’t cloud the spirits in the whole country.
After all, the perspective looks quite good.