Last year Estonia faced one of its largest digital security threats. This incident gave us a unique view on how Estonia became the global digital leader and how it continues to keep the position for the days to come.

During the years we have had numerous discussions on how exactly Estonia became the digital leader that it is today. As is common with many other disruptive startups — the corner stone of the digital leader is not technology. In fact, a lot of the technology Estonia is using is from the 2000s, and the country is continually proving to spend significantly fewer resources on building up its public digital infrastructure than other countries (except perhaps the countries that have bought their government technologies from Estonia).

Estonia, in a way, is a classic story of small vs big, startups vs corporations. Estonia’s population is 1.3 million people and the small country has extremely limited resources. For example, two years into its famous e-Residency program, the entire team working on the e-Residency initiative today is just 16 people.

Why Estonia?

The answer to Estonian success is not really about what Estonia did so much better than others, but rather what others were unable to do — Germany started looking into digital elections way before Estonia but has not been able to make it happen to this day. The UK has excluded the option for any basic digital infrastructure with its outdated standpoint which prohibits “numbering” people. Singapore became the most advanced smart city in the world but failed to build a digital backbone (like the Estonian X-Road) which would keep its digital infrastructure scalable and durable to time.

Blockchain is the technology that could reinvent the Internet

The main reason for Estonia’s success in the digital transformation lies in trust. “In our country, it could never work, people don’t trust our government enough” — this is what we hear a lot. This is the key and the main reason why similar digital transformation has failed in most of the countries — lack of trust. Giving all this data and access to your government requires an extensive amount of trust from its citizens. In most countries, this is not even an option.

The Estonian government has built its trust with small but decisive steps for the past 20+ years. Due to the country’s small size and its history under other rulers, Estonians don’t feel being distant from their government — everyone knows someone who knows someone in the government or the parliament, every parliament member has their personal contacts available for anyone to connect.

The trust has also piled up with small but determined digital transformation projects which have mostly proven successful. From bringing computers to every school of Estonia in the middle of 90s to digital elections, company registration and much more. These initiatives have improved the lives of Estonians and none of them have threatened the trust of its citizens.

Frankly, even the failures have been strengthening the trust — in 2007 Estonia became the first country in the world to fight a large-scale governmental cyber attack from Russia. The effective resistance of this incident later encouraged NATO to bring its cyber-security headquarters to Estonia.

Trust is the currency of today’s companies and governments

Just last week, Estonia encountered yet another incident where a group of scientists discovered a theoretical security flaw in the chip of the digital identity card which could affect a large amount (~700 000) of the national ID-cards. How Estonia solved it, however, offers a vivid understanding of why this country has earned its trust by its citizens.

Press conference on ID-card security flaw. Credits: Delfi

The government had no practical reason to bring this incident to the public — on the contrary, they were risking giving important clues on how to breach the system, they were risking their reputation and the trust for the system. To make matters worse, this incident appeared just a few months before the local government elections — the time when anything will be turned political.

However, the Estonian government officials still decided to go public immediately to announce the flaw in the system and even admitting that at this point they don’t have a solution for it — it would require them a few months of work to solve it.

Of course, the whole thing got fired up — every single politician had something to say about it, many were furious blaming everyone on the way. IT community was actively discussing every technical detail of the problem.

Being fully transparent during the whole situation and letting people have a word in it, was another proof that the foundation of the Estonian digital infrastructure is trust and transparency. Every innovative digital system fails from time to time, but when it happens, it should not destroy the fundamentals.

The hidden power of Blockchain

Besides trust, another crucial feature of the Estonian digital infrastructure is its transparency — as an Estonian citizen (or an e-Resident) you can always log in to your personal government side interface and see who has enquired information about you — a police officer, a doctor you visited earlier, or a tax official.

Although the Estonian digital infrastructure was built years before the blockchain technology, it shares the same basic values — creating transparency by keeping track of every transaction. And indeed, today thanks to the widespread discussions about blockchain, we can only hope that it will be more widely used for not only financial transactions and healthcare but for building the whole digital infrastructure.

Blockchain is the technology that could reinvent the Internet and bring back trust. It could help companies and governments overcome trust issues with their communities. But there is a catch, however — the government (or an organization) has to be ready for this kind of full transparency. Unfortunately, we still see countries and even companies who feel that they can’t allow this level of transparency and power to people.

The lesson of Estonian digital transformation success is a lesson on trust and transparency. Any company or organization, which looks into digital transformation and innovation, has to be sure to have its customers’, members’ or employees’ trust for the initiative. If there is a lack of trust, then look into ways on how new technology could improve it (like blockchain does).

The founder and CEO of Uber was forced to leave his position because of broken trust, otherwise risking the fate of the company. Trust is the currency of today’s companies and governments. Before you continue, ask yourself, do you have enough of it?

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