cover photo

Photo credit to Annika Haas

Note: Sources for everything I've talked about in this post will be linked at the end of this post.

Since I live in Estonia, I will take every opportunity to proudly talk about this little country in the Baltics. Estonia is at the forefront of a digital revolution in how countries are run. I'm not just saying that though, the NATO Cooperative Cyber Defence Centre of Excellence is based in our capital city Tallinn for a reason.

It takes hours to register a company from start to finish rather than days or months.

The benefit of our digital country is that paperwork (or a lack thereof) in Estonia moves at light speed and almost everything you need to do can be done online, including voting, which is done securely and anonymously.
For example, starting a company takes just hours instead of days or even months.
I have seen the speed at which a company can be registered with my own eyes, as I registered my own company back in July of 2017. It took me 15 minutes after I was familiar with the terminology and the registration was confirmed in 1 hour after the next workday had started.

Another very exciting topic is how Estonia is becoming a CaaS (Country as a Service) which I will talk about in a future post.

353_Map illustration_Estonian Design Team.png

Here is where we are on the map. Illustration from the Estonian Brand Toolbox.

A digital nation

Icons are from the official Estonia brand toolbox, image is made by me

Our digital systems are fairly extensive, spanning many fields. Everything from taxes being done in minutes to signing legal documents from anywhere in the world within seconds. I'll give a brief overview of what we have before I talk about how the blockchain fits into this picture.

Unlike in many other countries, every Estonian, irrespective of their location, has a state-issued digital identity. Thanks to this Estonia is years ahead of countries still trying to work out how to authenticate people without physical contact.

In Estonia, every person can provide digital signatures using their ID-card, Mobile-ID or Smart-ID, so they can safely identify themselves and use e-services.

Every person has a state-issued digital identity. They can use this identity to sign documents online securely.

e-Identity also works as a 2FA method for services not directly provided by the government. These services include banks, e-school systems built by private companies etc. For example, if I wanted to log in to my bank account securely to get higher sending limits, I would:

Go to the bank website or app
Select from Smart-ID, Mobile-ID or ID-Card (ranked in terms of user-friendliness from my perspective)
Enter my User ID
Enter my Citizen ID or phone number depending on the method
Click login
I see a confirmation code on screen to verify that I'd be confirming the correct session on my phone.
I get a popup on my phone that shows me the confirmation code and asks me if I want to confirm this session.
I click yes and enter my four-digit pin.
A few seconds pass and the login is confirmed.

Smart-ID requires the internet to be enabled on your phone and is the quickest to use from my experience.
Mobile-ID works using an app stored on the SIM card in your phone. Yes, you read that right. An app on your sim card so it will still work on a cheap phone that doesn't even have a touchscreen.
ID-Card is entirely local to the computer and requires a compatible smart card reader for your computer.

If you want to read more about e-identity, you can do so here.

Estonia is probably the only country in the world where 99% of the public services are available online 24/7. The only exceptions are marriages, divorces and real-estate transactions – you still have to get out from under the covers on a cold winter day for those.

i-Voting

Part of e-governance is i-Voting, which is an anonymous and secure way to vote in elections from the comfort of your own home or anywhere in the world. It is completely different from almost every other electronic voting system in the world.

Internet voting, or i-Voting, is a system that allows voters to cast their ballots from any internet-connected computer anywhere in the world. Completely unrelated to the electronic voting systems used elsewhere, which involve costly and problematic machinery, the Estonian solution is simple, elegant and secure.

To learn more about i-Voting, click here.

Thanks to e-governance systems, Estonia saves over 800 years of working time annually and has become a hassle-free environment for business and entrepreneurship.

Estonia is aiming to replace the public transportation network with self-driving vehicles. Yep.

The future

The government’s view is that self-driven vehicles are more than just cars with no hands on the wheel, but rather a disruptive force for tens if not hundreds of services both in the private and public sector. This is the concept for providing new, more efficient, convenient and sustainable public services across Estonia.

The aim is to reorganise the public transportation system using self-driven vehicles. The government has adopted a plan to create a fleet management system, integrating such vehicles into the public transport system with journey planning and call-to-order bus stops. Similarly, the government will launch pilots in other public service areas to seek new models of public service delivery based on autonomous mobility.

Like many developed nations, Estonia has introduced a number of Intelligent Transportation Systems solutions designed to make travel safer and logistics more convenient. For example, in March 2017, Estonia made it legal to test self-driven vehicles on all national and local roads in the country. Work is underway to create a full legal and cyber-risk management framework for using fully autonomous vehicles in regular road and traffic conditions.

The present

Right now, we have had a system for public transport that tracks the location of buses to estimate the arrival time in real time and shows that time on information boards at bus stops. This information also feeds into Google Maps to get accurate bus arrival times.

For tickets, we pay with NFC-enabled cards that are topped up with money. If you have a student id card, then you can tie your bus card to your student id to lessen the number of cards you need to keep with you.

In our capital city, public transport is free for all residents of the capital city.

e-Tax

Each year, around 95 percent of all tax declarations in Estonia are filed electronically. This is done using the e-Tax system, which is the electronic tax filing system set up by the Estonian Tax and Customs Board. The time required for filing taxes is now down to 3 minutes - on average.

Using a secure ID, a taxpayer logs onto the system, reviews their data in pre-filled forms, makes any necessary changes, and approves the declaration form. The process typically takes three to five minutes. Even one-click tax returns have been possible since 2015 – the data that is already in the system is displayed for the user along with the calculated result, then all the users have to do is click on the confirmation button. All this can take less than a minute.

e-Banking

It is hard to overstate the enormous role Estonia’s banks have played in creating and promoting the nation’s e-government solutions. Banks not only wholeheartedly embraced e-ID, encouraging customers to use their ID cards for secure transactions, even giving away free card readers, they also helped move the population online by developing and offering high-quality internet banking services. Today, over 99% of all banking transactions in the country are carried out online.

Based on regulatory changes in 2017, opening a bank account is now possible online using e‑ID or e-Residency card, a video interview recording and facial recognition technology. Banks are working hard to develop technical solutions that will allow them to welcome clients from anywhere without a face-to-face meeting by enhancing the security of customer identification.

In addition to individual income tax claims, other declarations can be made in the system:

An enterprise’s declarations for income tax, social tax, unemployment insurance and contributions to the mandatory pension fund
Value-added tax returns
Alcohol excise, tobacco excise, fuel excise and packaging excise duty returns
INF declarations
Customs declarations

From my personal experience, I can't imagine a world where I'd need to go to a bank to carry out a (smaller) transaction. It seems insane to me after having lived with this all my life.

e-Business

I set up my own company last year online. It took me 15 minutes after I had become familiar with the terminology and the company was confirmed in under an hour after the start of the next workday. It was super simple to do.

The tool used for this is e-Business register which is a system developed by the government. It allows people to set up a new business without having to go to a notary in minutes. Since 2011 the process has gone down from 5 days to just 18 minutes. All it takes is an ID card, mobile-ID or an e-Residency card.

With this tool, you can file annual reports, change business data or make detailed inquiries about other companies.

If you are an e-resident, you too can take advantage of these systems!

Education in Estonia is a mixed bag. I'll only be talking about the good parts of it in this post but I might talk about the bad parts in a post in the future.

We have two main applications used by schools are called e-School and Stuudium. These are platforms that connect teachers, students and parents on one platform. More specifically, these innovative tools provide an easy way for parents, teachers and children to collaborate and organize all the information necessary for teaching and learning.

The system provides an array of functions for its various users:

Teachers enter grades and attendance information in the system, post homework, and evaluate student behaviour. They also use it to send messages to parents, students or entire classes.
Parents use it to stay closely involved in their children’s education. With the help of round-the-clock access via the internet, they can see their children’s homework assignments, grades, attendance information and teacher’s notes, as well as communicate directly with teachers via the system.
Students can read their own grades and keep track of what homework has been assigned each day. They also have an option to save their best work in their own personal e-portfolios.
District administrators have access to the latest statistical reports on demand, making it easy to consolidate data across the district’s schools.

Having personally used these systems in my daily life for close to 10 years, I can honestly say that it's amazing. I can count the times the system has been down using only one hand's fingers.

In Estonia, your health record is digital. Your prescriptions, x-rays and other data is available to doctors and you as a patient from an online portal. While the system may function similarly to a centralized database for the users, in reality, all data is gathered from different healthcare providers as necessary. This information is then presented to doctors and patients in a standard format, even though the healthcare providers may be using different systems.

As one might guess, you need need to be sure of the integrity of this data. This will be talked about in the last two sections of this post.

Spoiler alert: blockchain technology is used to assure the integrity of the data.

For example, in an emergency situation, a doctor can use a patient’s ID code to read time-critical information, such as blood type, allergies, recent treatments, on-going medication or pregnancy. The system also compiles data for national statistics, so the ministry can measure health trends, track epidemics, and make sure that its health resources are being spent wisely.

Patients have access to their own records, as well as those of their children. By logging into the e-Patient portal with an electronic ID-card, the patient can review doctor visits and current prescriptions, and check which doctors have had access to their files.

Nowadays, life is fast and justice procedures – the cornerstones of a democracy – should be just as prompt. Thanks to fully automated court processes and electronic communication tools, Estonia has one of the most effective court systems in the world.

The e-Court system is a fully comprehensive system for managing all court procedures. The solution has been implemented for Estonian courts under the Ministry of Justice and paperless proceedings have been held since 2015.

If the case is simple, the hearing will be held electronically with no need to visit the courthouse. All participants will be sent the decision through the public portal using X-Road technologies. Finally, the concluding or bailiff procedures are also automated – the fine is collected automatically without any need to physically attend to the payment.

To keep everything secure, KSI blockchain, which is developed by Guardtime, is used, which will be talked more about in the next two sections.

KSI is a blockchain technology designed in Estonia and used globally to make sure networks, systems and data are free of compromise, all while retaining 100% data privacy.

There is a very good reason why I left this part of our digital system as the last one I talk about. Interoperability services are the part that ties everything together. Since the massive database of information is not held in one place but fragmented between all the institutions responsible for the services, there needs to be some way to communicate between all of these databases securely and make sure that the information sent has not been tampered with while it's in transit.

Enter X-Road.

X-Road is the data exchange layer that makes everything work together. It started out as just a tool to send queries to different databases but has now evolved into something much more complicated.

This software is now also implemented in Finland, Azerbaijan, Namibia and Faroe Islands. Source. It is the first data exchange platform in the world that allows for the automatic exchange of data between countries. Since June 2017, automatic data exchange capability has been established between Estonia and Finland.

To ensure secure transfers, all outgoing data from X-Road is digitally signed and encrypted, and all incoming data is authenticated and logged.

Since the 1st of January this year, X-Road has handled an estimated 6.9 million requests in a week. In total, X-Road has handled 3.33 billion requests since 2001.

If one picture is worth 1000 words, then this video is worth 5 300 000 words. Check it out and I guarantee you'll be excited after the video has ended.

As the video tells you, X-Road is an extremely important part of how our systems work in terms of operation and safety. Digital systems need to be resilient to attacks and X-Road helps Estonia achieve that.

KSI blockchain was developed by a company called Guardtime that was founded with the purpose of creating a formally verifiable security system for the Estonian Government i.e. eliminating third parties, trusted insiders or cryptographic keys in the verification of the integrity of government records, networks and systems.

Blockchain Technology Family Tree

The challenge was not cryptography but engineering, building a scalable and reliable service for the government that would continue to function even under constant cyber-attack.

They succeeded.

Estonia was using blockchain technology before the term "blockchain" had been coined in the bitcoin whitepaper.

The technology developed by Guardtime in Estonia entered production already in 2008 and over the last decade there have been more additions to the technology. They have added post-quantum signatures to replace RSA, Anti-Tamper hardware (Black Lantern), a provenance calculus designed to track and trace digital information as it crosses organizational boundaries and many other new ideas.

KSI technology stack

With KSI Blockchain deployed in Estonian government networks, history cannot be rewritten by anybody and the authenticity of the electronic data can be mathematically proven. It means that no-one – not hackers, not system administrators, and not even government itself – can manipulate the data and get away with that.
- e-Estonia

How does blockchain technology contribute to the well-being of a layman in Estonia?

The blockchain technology used helps ensure that the data concerning a person is not misused. For example:

blockchain technology helps detect who looks at a person’s digital health data and changes it and when;
blockchain technology helps to see when information about a company in the e-Business Register was changed and why;
blockchain technology helps to detect who changed data about real estate in the e-Land register or statements documented in the e-Court system as well as when and how;
blockchain technology helps to ensure that no one has manipulated smart devices such as intelligent transportation or smart war machines that could become life-threatening.

Conclusion

Estonia is a truly digital country. However, that doesn't mean that you have to miss out on it if you live outside of Estonia! You can be an e-resident and get a part of this fancy cake! I'll talk more about this in a future post, but you can learn more about e-residency here.

Right now, Estonia is building a cryptocurrency called Estcoin. I will talk more about it in a future post.