Is This Estonian Technology the Future of Online Business?

An open market in the Estonian capital of Tallinn. Source: Wiki Commons.

This month, the tiny European Republic of Estonia is rolling out the world's first "e-residency" program. What the heck is "e-residency," you ask? And, more importantly, why should you care?

You should care because Estonia's e-residency program could well be a model for the future of conducting business, paying taxes, investing, and living your day-to-day life in the modern, digitized world.

What e-residency is and isn'tObtaining e-residency in Estonia does not make you an Estonian citizen. Nor will your e-residency card serve as a travel document, residency card, or even a physical identification card. In the physical world, e-residency lacks much, if any, benefit at all.

However, in the digital realm, having Estonian e-residency opens a world of possibilities.Each e-residency card comes with a digitized certificate of authentication and a certificate for digital signatures. Together, these two allow you to verify and conduct business digitally from anywhere in the world.

With your e-residency card, which is capable of verifying your identity and allowing you to sign documents digitally, you can open bank accounts in Estonia. You can incorporate and administer a business. You can even pay your taxes or fill out your prescriptions, 100% online, encrypted and secure. All this can be done online, from anywhere in the world.

Estonia, it should be noted, is a member of the European Union.

Practicality today versus the potential for tomorrowThe reality for most investors is that this e-residency program, as it stands today, offers little to no benefit, unless one has a desire to open a bank account inside the EU. The program is designed more to assist foreign residents living in Estonia to gain easy access to the country's highly digitized infrastructure.

But to ignore this program's long-term possibilities is a mistake. In my view, this e-residency program could be a blueprint for how business is done around the world in the not-to-distant future.

Staying a step ahead of cyber crimeThere is no mistaking that the future of business, of investing, and of obtaining the services required for day-to-day living are increasingly tied to the Internet. As such, cyber crime and fraud will grow in step.

The Estonian e-residency program is the first attempt to make our digital lives more fully secured by tying it to our physical selves. The card's internal chip contains biometric information -- a retina scan and finger prints -- and it requires a pin number similar to modern-day debit cards.

Today, the only thing preventing an online identify thief from entering your online brokerage account and emptying your stock portfolio is typically a password or pin, and perhaps a security question or two.

It's not hard to imagine a future system, based in whole or in part on the Estonian model, that would also require a retina scan and/or a fingerprint scan. Beginning with the iPhone 5s, fingerprint identification is already available on smartphones, and it's no leap to imagine using the phone's camera for a retina scan.

The technology is available. What's missing is a systematized implementation of digital identification -- exactly the type of program being deployed in Estonia today.

In Estonia, the future is nowThe Estonian government manages everything from voting to prescription drugs online, along with the previously mentioned business and tax processes. These systems are efficient and low-cost, and with biometric-based encryption, they are quite secure. Votes are counted, contracts are signed, and money changes hands, all securely and digitally.

As everyday people, we should hope for the program in Estonia to be wildly successful in this e-residency experiment. As the world evolves, it will be innovations like these that allow governments, regulators, and everyday people to continue to take advantage of the benefits modern technology affords without falling victim to cyber crime.

As investors, we should be doubly hopeful. The markets will continue to be operated and regulated more and more with digital technology. Finding new and innovative ways to safeguard our investments, our transactions, and our financial futures is of paramount importance to us all.

The article Is This Estonian Technology the Future of Online Business? originally appeared on

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