E-Estonia: Cloud Computing and Virtualization Open Doors to Digital Nations

By Erik Linask October 24, 2014

It’s certainly an interesting concept – and one that shouldn’t be surprising from tiny Estonia, considering its history of technological leadership despite its size and economic stature (recall that Skype, Transferwise, Kazaa, and many other tech startups that have emerged from within its borders.) The tiny Baltic nation this week suggested it could build itself as an e-nation, effectively allowing anyone to become a digital citizen and living his digital life within its networks.

Effectively, it means physical residency may be anywhere in the world, but people can take up digital residence in Estonia, where they can open bank accounts, open branches or entire businesses, providing much-needed tax dollars… err... Euros… to Estonia. In return, the e-residents get reduced tax rates as an incentive for moving their businesses, and a well-designed and -maintained digital infrastructure, in which Estonia has already excelled compared to the global standard.

e-Estonia – a term that has become popular as a descriptor for the country’s emergence as a global digital leader – is already being promoted on an English language website, and now the concept of e-residency has been added.

“People from all over the world will have an opportunity to get a digital identity provided by the Estonian government – in order to get secure access to world-leading digital services from wherever you might be,” the site reads.

Technologically, it’s not only plausible, but likely, given what already exists in terms of virtualization and cloud computing. We are already seeing countless businesses effectively conducting business based in “the cloud” – we are now talking about turning the cloud ideal on its head to some degree. No longer will cloud be some ambiguous state of being or geography or being for your data. That’s always been part of the idea, that with cloud computing, it doesn’t matter where the data center is. Rather, at least one particular cloud will now be defined as e-Estonia and will include certain rights, benefits, and obligations that come with digital citizenship. Security will, undoubtedly be a question, and Estonia has already been victim to massive cyberattacks back in 2007. As a result, though, it has advanced experience defending against such breaches. It also has already implemented a highly advanced online voting system, with Estonian residents casting ballots from nearly 100 countries in elections earlier this year.

E-residency will not offer voting rights – at least not yet – though there has been discussion of it as potential future option. The idea is that, as more people and businesses become tax-paying e-citizens, they perhaps should have some say in regulation defining taxation and digital infrastructure. Indeed, this is more the slightly tricky, as there is reason to question whether e-residents are likely to take into consideration physical residents’ needs and issues when it comes to policymaking.

At least at the outset, e-residents will be required to travel to Estonia for documentation and security clearance, but even that could change in the future, as the plan is to allow e-residency petitions to be filed in embassies throughout the world.

With Estonia’s short but strong legacy of digital prowess, its e-residency program is likely to receive immediate attention from Finnish businesses, many of which already have ties to Estonia, but also other businesses across the globe looking for a means to extend business into the EU.

Estonia’s deputy general secretary of the Ministry of Economic Affairs and Communication, Taavi Kotka, who authored the bill that was accepted by a strong majority vote in Parliament, has a vision for 10 million e-Estonians by 2025 (7.5 times its physical population). The bill is set to take effect December 1 of this year, with the first e-Estonian to become official before the end of the year. Is this the next evolution of a changing global economy, one in which digital populations overtake offshore banking havens and populations are measured by an e-census? Perhaps not, but then again, it shouldn’t be surprising to see yet another example of technological innovation and leadership from this small corner of Eastern Europe. 




Edited by Stefania Viscusi

Group Editorial Director

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