How Blockchain Technology Could Help People Take Control Over Their Own Data Part 6

Estonia as a technology leader.


One of the biggest problems with national identity databases so far has been their vulnerability to hacking, which is a result of the centralization of databases. Practically speaking, centralization of databases means that once an attacker gets access to the database, he or she gets access to all the records in it.

One of the countries that solved this issue by implementing a distributed system is Estonia. Estonia is a very interesting example of a country that has made significant progress in its development because until 1991 the country has been a part of the Soviet Union. Back then, less than 50% of the residents of the country had a phone line and, according to an article in Economist, the only connection to the free world that existed in the country was a cellphone on a Finnish network that the foreign minister of Estonia was hiding in a garden. A little over twenty years have passed and coders from Estonia have coded Skype and created one of the most popular early file-sharing networks called Kazaa. In 2007, Estonia has become the first country in the world to allow fully electronic participation in the general elections in the country. Today is also provides its residents with one of the world’s fastest Internet access broadbands and holds the world record for the number of startups per person. The health system in the country stores information in the cloud and people pay for parking on the streets using their smartphones. 95% of the residents of the country file their taxes online and the entire process takes about five minutes.

It all started in 1992, when the prime minister of the country, whose name was Mart Laar, decided to transform the country and the economy. The average age of an employee in his government has been 35. In less than two years, Estonia implemented laws that introduced a flat income-tax, free trade policies and privatized properties that in the past belonged to the government of the Soviet Union. When Finland decided to upgrade its phone systems, it offered Estonia to give its old analogue system for free, but Estonia rejected the offer and built a digital system of its own from scratch. Similarly to that, the country went from having no registry of land to creating a digital one by skipping the implementation of archaic systems.

All the schools in the country were online in 1998 after Estonia implemented a nationwide initiative to bring computers and access to the Internet to the country.

In 2000, the government of Estonia has declared that access to the Internet was a human right.

In 2015, the country has announced that it was creating a digital identity register for non-citizens that would allow non-citizens to open a bank account in the country and to start a business in Estonia. Non-citizens of the country who participate in the program become e-residents and in the future the country plans to expand the benefits that e-residents get access to. The main benefit today is the ability of an e-resident of Estonia to start a business that is based in European Union because Estonia is a part of the EU.


Introduction to X-Road

X-Road is a data exchange blockchain-based layer that is a critical part of the electronic systems that the Estonian government uses to provide services to the citizens, residents and e-residents of the country.

The distributed, blockchain-based, electronic solution by the government of Estonia offers a full range of services, many of which have their own separate but not centralized databases and all the databases use X-Road. X-Road encrypts the information to ensure that it is safe and secure both during the storage and during the transfers of data between various databases.

Originally, the government was simply using the technology to send request to various disjointed databases, but it has later turned the technology into a tool that can send request and add information to database fields, several databases at the same time.

Today, the list of countries that use the tool includes Finland, Namibia and Azerbaijan.

In Estonia, both private and public entities can plug their information systems into the X-Road structure and enable secure data exchanges with other members of the layer.

Indirectly, the layer enables the government to provide persons and entities with access to databases managed by various portals and applications.