Estonia is one of the countries with the highest level of e-Government development. Blockchain is considered to be a key technology in the development of the Estonian e-Government because of its undeniable advantages and potential. From a technical point of view, blockchain technology improves the efficiency, security, and transparency of transmitted data.
Data transparency aims at equality of public access to information, while ensuring the clarity, consistency and reliability of the data provided. In the context of democracies, transparency and accountability often take precedence over confidentiality. However, prioritising confidentiality while ensuring transparency requires complex security protocols, which somewhat complicates the process.
In 2001, Estonia developed its own decentralised distributed system – X-Road, and has been using the KSI blockchain platform since 2008 in the registries of codes of healthcare, judicial system, law, security and Commercial Code, among which are e-Police, e-Law, e-Justice, as well as private sector e-services such as digital ID, e-Residency, e-Governance, e-Tax, i-Voting and e-Health.
Why does Estonia use Blockchain technology?
Many believe that Estonia is at the forefront of blockchain and decentralised technology by implementing the projects like KSI and X-Road, starting its digital transformation journey over 20 years ago. Estonia is currently the leading country in the development of e-Government, as it has taken many measures to support the digital society at the beginning of the 21st century. Accordingly, the policy of our country is aimed at increasing the efficiency and transparency of the state apparatus, as well as at developing the economy and improving the general welfare of citizens.
According to the “one-time principle” – the main principle of the Estonian legal framework, all information records are entered in the system once, and any updates must be made in the master record. This is necessary to ensure the integrity of the data and allows you to check the update history of this very data, as well as request records of confidential access.
The transparency and immutability functions of the blockchain (chain of blocks with information) allow detecting all kinds of data manipulation. Information stored in a blockchain-based ledger is nearly impossible to steal, alter or delete, which in turn ensures data integrity at rest. For this reason, it becomes clear why the Estonian government is using the blockchain platform to protect its own servers.
KSI: Keyless Signature Infrastructure
As mentioned earlier, the blockchain platform used in Estonia is called KSI Blockchain (Keyless Signature Infrastructure) provided by Guardtime technology. KSI is designed to protect networks, servers, and databases in Estonia from attacks; detect any deliberate or unintentional data changes; and ensure data integrity at rest.
The KSI uses a “once-only principle” to ensure the integrity of the present digital data. In simple terms, all data entered into the system will be hashed into a string of keys called a hash value. The hash value, access time, and signer are then entered into the KSI blockchain, which creates a “signature” that proves the uniqueness of the document. Thanks to such a data storage system, the source information never leaves the server, allowing the state apparatus to track any changes in the blockchain. It makes it possible to check the “signature” of a document without referring to the original document, hence the literal components of the name of the KSI – keyless signature infrastructure.
X-Road: Data Exchange Layer (DXL)
X-Road is a centrally controlled distributed layer of data exchange between information systems. Simply put, X-Road is a platform that connects different interfaces, servers, and services in Estonia, creating a common level of data exchange between systems. Without exception, all digital systems of state institutions in Estonia are connected to the X-Road platform.
X-Road provides a relatively robust information security platform. However, the platform can only protect data in transmission, but cannot guarantee the safety of data at rest. This is where the features of the KSI blockchain come into play.
Today, blockchain-based systems are practiced in many states as the implementation of digital functions in the government, namely in Estonia, Switzerland, China, Japan, America, Great Britain, and other countries aiming to optimise public administration processes. The use of blockchain technologies still involves some difficulties, but the potential of this technology cannot be ignored. The KSI blockchain in Estonia is a vivid example of the successful use of blockchain for the implementation of e-Government in state processes.
FinTech companies in Estonia using Electronic ID and Blockchain
Over 100 Estonian FinTech companies, ranging from innovative startups like TransferWise to blockchain leader – Guardtime, make Estonia a global center of FinTech excellence.
The following is a list of Estonian FinTech companies that target local or larger markets, but remain in touch with the Estonian back office or management:
| Company | Description | Field |
|---|---|---|
| AASA GLOBAL | Credit solutions for retail and SME clients, back office in Tallinn. | Lending |
| ADMIRAL MARKETS | International brokerage firm, back office in Tallinn. | Capital Markets |
| ADVAPAY | Payment services provider. | Payments |
| AGRELLO | Smart contracts powered by A.I. with contract versions saved on the blockchain. | Blockchain |
| ALPHABLUES | Automating customer experience through Chatbots. | AI |
| ARGELD | Crowdfunding of real estate. | Crowd/P2P |
| ASKROBIN | Chatbot utilising ML and AI to improve financial inclusion for the underbanked. | AI |
| BANKISH | Deposit and loan management system provider, spin out from digital lender Finora Capital. | Banking/API |
| BAROQUE STREET | Japanese-Estonian crypto market data provider. | Crypto |
| BIGBANK | Online consumer and corporate lender active in 9 European countries from Estonia HQ. | Banking |
| BIG DATA SCORING | Machine learning analyses of big data to help lenders approve more loans with lower defaults. | Credit Scoring |
| BIKE ID | Register and insure your bike online in 2mins. | Insurance |
| BITOFPROPERTY
|
Crowdfunding of real estate in Estonia and Singapore. | Crowd/P2P
|
| BLACK INSURANCE
|
Startup seeking to streamline the insurance value chain by removing third parties. | Insurance, Blockchain
|
| BLOCKHIVE
|
Collaboration platform for blockchain based business and cryptocurrencies. | Blockchain, Crypto
|
| BONDKICK | Crowdfunding of SME’s in UK, Estonian management | Crowdfunding/P2P |
| BONDORA | Peer-to-Peer lender with 27,000 investors. | Crowdfunding/P2P |
| BULKESTATE | Real Estate Peer-to-Peer lender, redomiciled from Latvia to Estonia. | Crowdfunding/P2P |
| CACHET | Flexible insurance for drivers of ride-hailing firms Uber, Bolt and Yandex. | Insurance |
| CASH ON GO
|
Digital consumer lender in UK, back office in Estonia. | Lending |
| CATAPULT | Crowd funding of start-ups in S.E. Asia secured on the blockchain. | Crowdfunding/P2P |
| CHANGE | Start-up Digital banking based on the Blockchain, active in Singapore, IT in Estonia. | Banking, Blockchain |
| CINDX | Cryptocurrency asset management, wallet, and technology solutions. | Crypto |
| CODEBORNE | Software house with financial services references. | Software |
| COINEX GROUP | Cryptocurrency exchange and hardware. | Crypto |
| COINMETRO | Cryptocurrency trading platform built on the Blockchain. | Crypto, Blockchain |
| COINTRAFFIC | Digital agency for Crypto and Blockchain. | Crypto, Blockchain
|
| COST POCKET | Digital expense management and reporting application for corporates. | Software |
| CREDIT STAR GROUP | Digital consumer lender in 8 countries. Back office in Tallinn. | Lending |
| CREDITINFO GROUP | Icelandic owned credit data and solution provider with sizeable ops in Estonia. | Credit Scoring |
| CREDY | Global real-time lead broker for online lending industry. | Lending |
| CROWDANA | Crowdfunding of start-ups in UK. | Crowdfunding/P2P |
| CROWD ESTATE
CROWDSURE |
Crowd funding of real estate.
Crowd insuring. |
Crowdfunding/P2P
Insurance, Crowdfunding/P2P |
| CYPTERIUM
|
Crypto wallet, payment and card solutions. | Crypto |
| CUBER | JV between LHV Bank and ChromaWay offering instant, secure, mobile payments in any currency. | Payments |
| DATA ME | Credit information processing and analytics. | Credit Scoring |
| DECRYPTO | ATM provider providing immediate exchange between cash and Bitcoin. | Crypto |
| DX.EXCHANGE | Start-up offering ownership of NASDAQ listed stocks via their proprietary token. | Crypto, Capital Markets |
| E-RESIDENCY
|
Started as a project to provide access to Estonia’s business environment, now a partner to Holvi and UNCTAD. | Identity |
| EESTY | Digital wallet for storing cryptocurrencies, with ability to link debit card for real economy payments. | Crypto |
| ERPLY | Point of sale technology, payments, and store credit. | Payments |
| ESTATE GURU | Crowd funding of real estate. | Crowd/P2P |
| ESTO | Consumer credit specialist, including POS credit, and leasing.
|
Lending |
| ETHLEND | Startup developing borrowing and lending marketplace based on Ethereum Smart Contract. | Lending, Blockchain |
| EVERYPAY | Payment service provider for e-commerce and phone transactions. | Payments |
| FAIROWN | Subscription for physical products and related services via financing. | Software |
| FEELINGSTREAM | AI specialist helping FS firms analyse customer intent to improve cross-sell and retention. | AI |
| FERRATUM | Finnish owned Bank with consumer credit and back office operations in Estonia. | Lending |
| FINTECH MARKET | Software solutions for risk, loan, and lead management. | Software |
| FIIZY | Loan marketplace aggregating credit offers, active in N. America, S. America and Europe from Estonian HQ. | Lending |
| FITEK | Automation of financial processes such as Purchase-to-Pay and Order-to-Cash. | Payments |
| FIIZY | Digital marketing company focused on financial services. | Payments |
| FORTUMO | Payments specialist supporting over 132,000 merchants in 92 countries with direct carrier billing. | Payments |
| FRIENDLY FINANCE | Digital consumer lender in 6 European countries. | Lending |
| FUNDERBEAM | Data to assist entrepreneurs and analyse start-ups. Crowd funding of start-ups. | Crowdfunding/P2P, Blockchain |
| GUARDTIME | Enterprise security and verification of compliance solutions for financial service providers. | Blockchain |
| HASHCOINS | Produce software and hardware for bitcoin mining. New venture HashFlare provides cloudmining services. | Crypto |
| HOOANDJA | Crowd funding for creative projects. | Crowdfunding/P2P |
| ICEFIRE | Software house with various FinTech solutions including core banking, payments, insurance, and wealth. | Banking/API |
| IGNITE | Software house with various customised cryptocurrency, Blockchain and insurance references. | Crypto, Blockchain |
| IPF DIGITAL | Digital consumer lender, global IT hub in Tallinn. | Lending |
| INBANK | Fast growing consumer lender and retail bank. | Banking |
| INSLY
|
Software making it easy for Insurance brokers, agents, and end users to understand and transact. | Insurance |
| INVESTLY | Peer-to-Peer invoice finance for SME’s. Active in Estonia and the UK. | Invoice Finance, P2P |
| INWISE | Platform for factoring invoices via auction, parent company of Supplier Plus, supply chain financing. | Invoice Finance |
| INZMO | Insurance application increasing speed of cover and providing overview of assets, cover. | Insurance |
| IUTECREDIT | Consumer lender in Balkan region, Estonian management team. | Lending |
| IUVO | Peer-to-Peer investment platform, redomicilied from Bulgaria. | Crowdfunding/P2P |
| KEY CAPITAL | Advise on the development, commercialisation and implementation of FinTech solutions. | Advisory
|
| LHV BANK | Leading retail bank and FinTech investor. | Banking |
| LIFEUP | Digital service management for small and medium sized FS clients. | Software |
| MAKECOMMERCE | Payments solutions for e-commerce. | Payments |
| MESSENTE COMMUNICATIONS | SMS and PIN solutions for notifications, fraud prevention and 2 factor authentication. | Authentication Software |
| MINDTITAN | AI solutions for sales, customer service, fraud and risk management. | AI |
| MOBILAB | Design and build financial services apps and digital wallets. | Banking/API
|
| MONESE | Open a UK back account on your mobile, regardless of your citizenship. | Banking |
| MONESTRO | Peer-to-peer lender. | Crowdfunding/P2P |
| MOONCASCADE | Software house with various global FinTech, payment and mobile app references. | Software |
| MOTHERSHIP | ICO funded platform for trading cryptocurrencies. | Crypto |
| NASDAQ
|
Blockchain services developed in Tallinn. | Blockchain, Capital Markets |
| OMARAHA | Peer-to-Peer lender. | Crowdfunding/P2P |
| PAXFUL | Peer-to-Peer Bitcoin marketplace registered in Estonia. | Crypto |
| PLANET 24 | Car leasing and insurance provider in South Africa, under Estonian management. | Credit |
| POCOSYS | White label banking, onboarding, savings and payments solutions. | Payments |
| POLYBIUS | Aims to create regulated bank for the digital generation, spanning cards, cryptocurrency and lending. | Lending, Cards, Crypto |
| PROEKSPERT | Software house with various payment and trading platform applications. | Software |
| PROOF OF YOU | Digital signature and intelligent documentation for P2P economy participants. | Identity
|
| RINGIT | Custom software solutions, clients include Banks in Estonia. | Software |
| SALV | AML platform start-up founded by ex Transferwise team. | AML |
| SCOREWISE | Credit scoring systems for consumer credit. | Risk Management |
| SK IDENTITY SOLUTIONS | e-Identity solutions including cards, mobile and sim-less. Formed by Swedbank, SEB Bank and Telia. | Identity |
| SORBASE | Cryptocurrency aggregator connected to 25+ of the largest crypto exchanges around the world. | Crypto |
| TRANSFERFAST | High speed intra-bank payments for corporates. | Payments |
| TRANSFERFRIEND | Payments and digital wallet provider active in S.E. Asia under Estonian management. | Payments |
| TRANSFERWISE | Global currency transfers, currently expanding currency pairs and in to corporate segment. | Payments |
| UNIFOX | Implementing Blockchain technologies to make cryptocurrency accessible to ordinary people. | Blockchain, Crypto |
| UNION DIGITAL | Client Engagement, Credit Scoring, Digital Core and Crowd/P2P solutions for Nordic-Baltic FI’s. | Banking/API |
| UNITED FINANCE | Financial institution specialising in service, clients in Estonia and Finland. | Finance |
| VERIFF | Web and mobile identity verification to reduce fraud and improve KYC. | Identity |
| WALLESTER | Licensed Payment Service Provider offering Card as a Service (CaaS) solution to Merchants and FIs. | Cards |
| ZANTEPAY | Cryptocurrency multiwallet-debit card integration solution. | Crypto |
| ZEGO | London based InsureTech with Estonian founder and CEO. | Insurance |
| ZLICK | Start-up focusing on zero click micropayments. | Payments |