Estonia is eyeing a proposal that could drag the euro into the crypto age, creating a digital token backed by the single European currency that promises to tame the volatility plaguing bitcoin and other cryptocurrencies. AFP PHOTO /e-Residency programme's press office
Estonia is eyeing a proposal that could drag the euro into the crypto age, creating a digital token backed by the single European currency that promises to tame the volatility plaguing bitcoin and othShow more

Is a ‘crypto euro’ the solution to bitcoin’s instability?



Estonia is looking to drag the euro into the crypto age -- and tame the volatility plaguing bitcoin and its peers -- by creating a digital token backed by the single European currency.

Cryptocurrencies have been on a rollercoaster ride recently, with bitcoin swinging from US$10,000 to nearly $20,000 and back in under two months, and volatility is a major hurdle to their widespread adoption for electronic transactions.

One way to counter this would be to issue digital versions of an existing currency, but an initial proposal by a government agency in eurozone member Estonia was torpedoed by European Central Bank chief Mario Draghi last year.

Nevertheless, Kaspar Korjus, managing director of the Estonian government's e-Residency global digital identity programme, is back with three new proposals to create an "estcoin" digital token that "doesn't necessarily" break ECB rules.

His three models for creating an "estcoin" would use the blockchain technology behind bitcoin and other peer-to-peer payment systems.

Blockchain experts argue that one of the proposals could pave the way for the European single currency to be used on a blockchain platform, but forex analysts are sceptical.

Estonia, the birthplace of Skype and digital global money transfer site Transferwise, is something of a pioneer in shifting government services online. And it also seeking to make it easier for businesses to operate.

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Mr Korjus' e-Residency programme allows people worldwide to open businesses in Estonia -- and hence the European Union -- and manage them remotely, declaring taxes and signing documents digitally.

More than 4,000 businesses and 28,000 individuals have signed up to the scheme since it was launched in 2014.

All three "estcoin" proposals would be tied exclusively to the e-Residency programme.

In the first, Estonian e-residency holders investing in the programme would be rewarded with estcoins.

In the second, "estcoins" would be tied to a user's e-Residency identity and used for "digitally signing documents, logging into services or enforcing smart contracts."

In both of these versions, the estcoin's value would depend on its usefulness on the blockchain, and would not be pegged to the euro.

A third model would essentially enable anyone in Estonia's e-residency community to use euros on the blockchain, Mr Korjus told AFP.

Under this version, "banks would be required to move money in and out of euro estcoins, but transactions could then take place independently of them through the blockchain," Mr Korjus explained in an official blog post.

Here, the estcoin's value would be backed up by "the commitment of the government to buy back every euro estcoin for one euro", which would be the first time a cryptocurrency was backed up by a state guarantee to convert it into a major currency.

According to cryptocurrency expert Xen Baynham-Herd, this third proposal would be a "new way of expressing a currency, but not a new currency itself."

He likens it to the "utility settlement coin", a prototype he helped develop at Swiss bank UBS and which is intended to be used for settling trades of financial instruments.

UBS and other banks have teamed up to use blockchain technology to speed up such settlements and they suggest resolving the issue of the unit's value by linking it to an existing currency.

Mr Baynham-Herd said the prototype unit would be backed by "existing cash reserves held at a central bank or commercial bank which is exactly what the 'euro estcoin' would be."

Since such a prototype was being explored by a large number of central and commercial banks around the world, "the underlying idea isn't hugely controversial," said Mr Baynham-Herd, who is now head of strategy and lead economist at Blockchain.com, which develops blockchain infrastructure.

He believes ECB chief Mr Draghi would view the new "euro estcoin" token differently, since it was "simply a new way of issuing or representing existing euro reserves. The value would be one-to-one -- there's no new money being created."

But Fawad Razaqzada, an analyst at Forex.com, was more cautious, saying if the "euro estcoin" were pegged to the single currency, it would "effectively create new euros", which would be illegal.

He pointed out that the Estonian government's involvement would lend the token a legitimacy and value that many cryptocurrencies were lacking at the moment.

"Whatever the outcome, it will be an interesting experiment," he told AFP via email.

Estonia's central bank has been cool to the proposals, which it notes have yet to be officially endorsed by the government.

"The emission of virtual tokens that could be converted limitlessly into euros according to an officially fixed exchange rate would definitely be more problematic" than the authors imagine, spokeswoman Ingrid Mitt told AFP.

But Siim Sikkut, a senior official at Estonia's finance ministry, said that "we fully welcome the e-Residency team's initiative."

Milestones on the road to union

1970

October 26: Bahrain withdraws from a proposal to create a federation of nine with the seven Trucial States and Qatar. 

December: Ahmed Al Suwaidi visits New York to discuss potential UN membership.

1971

March 1:  Alex Douglas Hume, Conservative foreign secretary confirms that Britain will leave the Gulf and “strongly supports” the creation of a Union of Arab Emirates.

July 12: Historic meeting at which Sheikh Zayed and Sheikh Rashid make a binding agreement to create what will become the UAE.

July 18: It is announced that the UAE will be formed from six emirates, with a proposed constitution signed. RAK is not yet part of the agreement.

August 6:  The fifth anniversary of Sheikh Zayed becoming Ruler of Abu Dhabi, with official celebrations deferred until later in the year.

August 15: Bahrain becomes independent.

September 3: Qatar becomes independent.

November 23-25: Meeting with Sheikh Zayed and Sheikh Rashid and senior British officials to fix December 2 as date of creation of the UAE.

November 29:  At 5.30pm Iranian forces seize the Greater and Lesser Tunbs by force.

November 30: Despite  a power sharing agreement, Tehran takes full control of Abu Musa. 

November 31: UK officials visit all six participating Emirates to formally end the Trucial States treaties

December 2: 11am, Dubai. New Supreme Council formally elects Sheikh Zayed as President. Treaty of Friendship signed with the UK. 11.30am. Flag raising ceremony at Union House and Al Manhal Palace in Abu Dhabi witnessed by Sheikh Khalifa, then Crown Prince of Abu Dhabi.

December 6: Arab League formally admits the UAE. The first British Ambassador presents his credentials to Sheikh Zayed.

December 9: UAE joins the United Nations.

How to protect yourself when air quality drops

Install an air filter in your home.

Close your windows and turn on the AC.

Shower or bath after being outside.

Wear a face mask.

Stay indoors when conditions are particularly poor.

If driving, turn your engine off when stationary.

Citadel: Honey Bunny first episode

Directors: Raj & DK

Stars: Varun Dhawan, Samantha Ruth Prabhu, Kashvi Majmundar, Kay Kay Menon

Rating: 4/5

ETFs explained

Exhchange traded funds are bought and sold like shares, but operate as index-tracking funds, passively following their chosen indices, such as the S&P 500, FTSE 100 and the FTSE All World, plus a vast range of smaller exchanges and commodities, such as gold, silver, copper sugar, coffee and oil.

ETFs have zero upfront fees and annual charges as low as 0.07 per cent a year, which means you get to keep more of your returns, as actively managed funds can charge as much as 1.5 per cent a year.

There are thousands to choose from, with the five biggest providers BlackRock’s iShares range, Vanguard, State Street Global Advisors SPDR ETFs, Deutsche Bank AWM X-trackers and Invesco PowerShares.

Ten10 Cricket League

Venue and schedule Sharjah Cricket Stadium, December 14 to 17

Teams

Maratha Arabians Leading player: Virender Sehwag; Top picks: Mohammed Amir, Imad Wasim; UAE players: Shaiman Anwar, Zahoor Khan

Bengal Lions Leading player: Sarfraz Ahmed; Top picks: Sunil Narine, Mustafizur Rahman; UAE players: Mohammed Naveed, Rameez Shahzad

Kerala Kings Leading player: Eoin Morgan; Top picks: Kieron Pollard, Sohail Tanvir; UAE players: Rohan Mustafa, Imran Haider

Pakhtoons Leading player: Shahid Afridi; Top picks: Fakhar Zaman, Tamim Iqbal; UAE players: Amjad Javed, Saqlain Haider

Punjabi Legends Leading player: Shoaib Malik; Top picks: Hasan Ali, Chris Jordan; UAE players: Ghulam Shabber, Shareef Asadullah

Team Sri Lanka Cricket Will be made up of Colombo players who won island’s domestic limited-overs competition

Getting%20there%20and%20where%20to%20stay
%3Cp%3EEtihad%20Airways%20operates%20seasonal%20flights%20from%20Abu%20Dhabi%20to%20Nice%20C%C3%B4te%20d'Azur%20Airport.%20Services%20depart%20the%20UAE%20on%20Wednesdays%20and%20Sundays%20with%20outbound%20flights%20stopping%20briefly%20in%20Rome%2C%20return%20flights%20are%20non-stop.%20Fares%20start%20from%20Dh3%2C315%2C%20flights%20operate%20until%20September%2018%2C%202022.%C2%A0%3C%2Fp%3E%0A%3Cp%3EThe%20Radisson%20Blu%20Hotel%20Nice%20offers%20a%20western%20location%20right%20on%20Promenade%20des%20Anglais%20with%20rooms%20overlooking%20the%20Bay%20of%20Angels.%20Stays%20are%20priced%20from%20%E2%82%AC101%20(%24114)%2C%20including%20taxes.%3C%2Fp%3E%0A%3Cp%3E%3C%2Fp%3E%0A
RESULTS: 2018 WORLD CUP QUALIFYING - EUROPE

Albania 0 Italy 1
Finland 2 Turkey 2
Macedonia 4 Liechtenstein
Iceland 2 Kosovo 0
Israel 0 Spain 1
Moldova 0 Austria 1
Serbia 1 Georgia 0
Ukraine 0 Croatia 2
Wales 0 Ireland 1

VEZEETA PROFILE

Date started: 2012

Founder: Amir Barsoum

Based: Dubai, UAE

Sector: HealthTech / MedTech

Size: 300 employees

Funding: $22.6 million (as of September 2018)

Investors: Technology Development Fund, Silicon Badia, Beco Capital, Vostok New Ventures, Endeavour Catalyst, Crescent Enterprises’ CE-Ventures, Saudi Technology Ventures and IFC