The United States needs a new digital infrastructure. Not in terms of cables laid in the ground, but rather, in a new infrastructure behind American citizenship. We have the potential to unlock new business opportunities, expand our economy, make voting easier, and identity theft harder. Looking to Estonia, and its recent approach to identification and virtual residency provides a model for America to follow. Perhaps among the greatest selling points of this program, is that the federal government need not be the administrator of it, rather this could be tested and tweaked state-by-state.
Three years ago, Estonia introduced a new digital residency program (if you’re familiar with this program, skip the next two paragraphs). One can become a digital resident, start a business in Estonia, without being a citizen of the country. This does not give on the right to travel in Estonia, or live in Estonia, nor to avoid paying taxes elsewhere. However, it does allow the business access to the European Union’s common market. In exchange for this, and all the tools provided by the Estonian government to help business owners, business owners pay a flat €100 ($118) fee, and take a trip to an Estonian embassy or consulate in their home country. Then, the business is free to operate like an Estonian business, including paying Estonian taxes, presently set at 21% of all profits paid out to shareholders, and 0% of all other profits.
Being a digital resident is also made easier by the Estonian government, because a national ID card is issued with a chip inside it—not unlike your credit card. This national ID card identifies the business owner, and when a special device is purchased for a laptop or desktop computer, can be used to identify the holder of the card online, including when signing official documents. Given that this national ID card is not unique to digital residents, in fact 98% of Estonians have one, the benefits of the card are even greater, and the support broader. In fact, regular Estonian residents can even vote using their national ID card.
The technology behind these ID cards, when properly implemented, is solid. The two-key approach that Estonia uses makes it exceptionally difficult to fake, and guessing a key would take approximately 6.4 quadrillion (1015) years on present computers. However, there are new risks with these cards, just as there are with the old system of driver’s licenses and signatures that we so commonly use today. Just this fall, a flaw was found in the manufacturing of the ID cards. Within two months, the flaw was fixed, cards were replaced, and no cases of identity theft were reported. This provides a word of caution to those interested in implementing such a system elsewhere. Yet, this should not be a word of prohibition towards this idea. Rather, it should urge care and attention when designing the system from start. Manufacturing of these cards should be done by the best, and should be done exclusively in the United States if we are to adopt such a system.
The United States should adopt a digital ID card system like Estonia’s, after some review to ensure better security within manufacturing processes. The benefits are enormous, and solve certain issues within our country. First, the only real risk with these cards, when properly made, is if someone loses a card or has their card stolen from them (though cards could easily be deactivated remotely). The benefits are huge: anytime a piece of identification is checked, you could be far more confident in that fact that it is not a fake—this improves security at TSA, voting, and makes underage purchases of alcohol substantially more difficult. Plus, such an ID system would make it possible for voting online, if our political climate ever gets to such a point at which that is acceptable. Stronger yet, and especially important considering the recent Equifax hack, it would effectively abolish the use of the social security number as a confidential ID number. With this system, your ID number would be public, but your key would be yours and never shared. Identity theft would be much more difficult.
Plus, this allows for much more expansion of the technological industry within the United States—applying for bank accounts online could be far more common. The economic expansion from the mere manufacturing of these cards, and related devices could also be substantial, almost certainly in the billions of dollars. Taking this step would benefit America as a whole, and would push us down a track of continued innovation. Such a system would allow states to create an e-residency like Estonia’s if they so desired. For states such as Delaware and Wyoming, which focus on recruiting companies to their state even if their primary operations are not there, this could be a huge boon. If virtual residency should be available to non-Americans is a much more challenging question, but for even just Americans alone, there is substantial potential.
It is time for a new wave of innovation within America. We need to define what it means to be an American citizen in this 21st century. A stronger identification system, and technologically founded approach would be a great leap forwards for our country, a leap that many other countries would likely follow shortly thereafter.