Is e-Estonia Built on Blockchain Technologies? [Fact Check]

Or is there more to it?

e-Estonia is commonly touted in the Blockchain community as a digital republic that utilizes blockchain technology. It is viewed as a haven for EU start-ups, with their e-residency model spread far and wide as a prime example for technological progress. My MA thesis research on Blockchain and the Sustainable Development Goals took me down the rabbit hole on e-Estonia and I found out that e-Estonia, is in fact, not technically on blockchain.

So how did we get here?

This article will provide an in-depth look at how e-Estonia was formed, the X-road and will debunk the myth that it uses blockchain technology.

Introducing e-Estonia

After gaining independence as a sovereign nation in 1991, there was a push for modernization in Estonia post-Soviet occupation. This led to several digital reforms in the 1990s and brought Estonia into the digital age.

Estonia is one of the few countries in the world today to pass legislation declaring internet access a human right.

In order to tackle transparency and accountability issues in government, Estonia introduced the No Citizen Left Behind program, as a way to provide access to e-government services to as many people as possible.

This program expanded throughout the country to provide more than 700 Public Internet Access Points, and included public Wi-fi. The success of the No Citizen Left Behind program led to the inevitable creation of e-Estonia, which is now considered one of the most advanced e-societies in the world, on par with Switzerland.

According to Nathan Heller, e-Estonia is:

a coordinated governmental effort to transform the country from a state into a digital society

He goes on to say that:

e-Estonia is the most ambitious project in technological statecraft today, for it includes all members of the government, and alters citizen’s daily lives. The normal services that government is involved with – legislation, voting, education, justice, health care, banking, taxes, policing and so on – have been digitally inked across one platform, wiring up the nation.

Today, 99% of all public services in Estonia are now available to citizens as e-services. These include anything from mobility services, business and finance services to access to health and education records, through what is known as X-Road.

The X-Road Project

The X-Road allows data to be linked through individual servers with end-to-end encrypted pathways, letting information live locally. In this system, Estonia’s data isn’t centrally stored, and each agency stores their data separately. Data isn’t duplicated yet can still be accessed from authorities and government agencies.

X-Road maintains the integrity of the data while simultaneously maintaining confidentiality while still allowing other agencies to access the data.

Blockchain and e-Estonia

According to e-Estonia, blockchain is allegedly applied in Estonia not only through X-Road, but in the following ways:

1. The electronic ID-card system used by the Estonian e-Health Record uses blockchain technology to ensure data integrity and mitigate internal threats to the data. In this way every occurrence of data use and misuse is detectable and major damages to a person’s health can be prevented (such as the wrong medicine or the wrong dose). Blockchain provides real-time alerts to attacks, enabling the government to respond to incidents immediately before large-scale damages occur.

2. The Estonian KSI Blockchain technology protects Estonian e-services such as the e-Health Record, e-Prescription database, e-Law, and e-Court systems, e-Police data, e-Banking, e-Business Register, and e-Land Registry The same KSI Blockchain technology is used by the NATO Cooperative Cyber Defence Centre of Excellence, EU IT Agency, US Defence Department to name a few.

Misconceptions About e-Estonia

The first major core misconception of e-Estonia lies in the underlying technology, and whether it is apt to call it blockchain at all. Allegations have surfaced online that e-Estonia does not implement blockchain at all, instead, it is an urban myth which gained traction and made its way throughout the internet.

According to The Verge, since Estonia’s system predates the creation of blockchain technology, there is some disagreement over whether it should even be called blockchain technology at all. It is believed that people misunderstood the use of hash linked time-stamping used in e-Estonia to protect the integrity of data on the Blockchain.

What makes things more interesting is that e-Estonia itself appeared to backtrack and published a report from the Nordic Institute for Interoperability Solutions (NIIS) about the abuse of the word “Blockchain” on their website.

According to this report, X-Road is not on the Blockchain but both utilize similar cryptographic hashing functions for linking data items to each other.

According to Kivimäki:

Cryptographic hash functions existed well before blockchain so even if both blockchain and the X-Road use them does not mean that X-Road is based on blockchain.

It is further alleged that the vendor that provided the technology of e-Estonia, Guardtime, re-branded its offering from hash linked time-stamping to a blockchain technology.

Limitations of e-Estonia

One of the major limitations that has been identified with e-Estonia is adoptability. Although it is touted as a decentralized haven for digital identity, with access to several e-services, there are still barriers to entry.

Currently, only 54 out of 925 local databases are connected to e-Estonia. The issue of adoptability is prevalent because information is still kept either on paper or using standard office software and has not been merged with the X-Road system.

There is also the question of financial resources, and whether Estonia plans to continue to invest in providing universal access to all databases and educating all its citizens on how to use them.

Since the creation of e-Estonia, paper-based transactional processes are becoming scarcer. The current overall dependency on computer networks in Estonia is at a high level that strong cyber security mechanisms, whether it be through blockchain or through traditional software solutions are critical.

After a major hack in 2007, Priisalu and Ottis noted that the banking and finance sectors for example, were already so dependent on the e-systems that any security breach or hack would result in devastating repercussions.

Nowadays, if there were to be a breach in the system, there may be a risk of not being able to replace potentially lost transaction processing through put with manual paper-based processing in any meaningful scale.

The Future of Blockchain and e-Estonia

Estonia, through its creation and promulgation of the digital e-society is on track to becoming one of the most technologically dependant nations currently in the UN. If Blockchain is adopted in the future, it could provide an optimal good governance model which would work in conjunction with X-Road allowing its residents to thrive and setting an example for other UN Nation States.

By promoting transparency and ready access to government services, Estonian citizens can trust government institutions and are granted more control of what happens to their data using their ID Card.

Blockchain’s key characteristics and attributes are important to furthering greater control and to promote more effective good governance structures. By leveraging blockchain technology, the Estonian government can ensure greater security measures, increased transparency, individual control, a unique digital signature and consensus mechanisms.

Citizens can trust the immutability of the blockchain and trust that their information remains safe from potential external hacks or security breaches.

Although e-Estonia suffers from problems of adoption and lack of financial resources, the investment and universal adoption of technology has proved positive and trust has remained. In a rapidly technologically developing world, is critical to ensuring trust between various
stakeholders of a nation.

Laura Marissa Cullell is an MA Graduate of the UN University of Peace in International Law and Human Rights. She wrote her thesis on Blockchain and the Sustainable Development Goals: Utilizing Disruptive Technologies to Promote Human Rights, Peace, and Good Governance. She loves puns, cookie dough, glitter, and reading an obscene amount of books at the speed of light.