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TALLINN, Estonia — The centuries-old city center here looks quaintly antique, with well-worn cobbled streets lined by medieval buildings at nearly every turn.
But the people have fully embraced the digital world, enthusiastically adopting public and private online services — offering a snapshot of a society that lives first and foremost online.
Estonians, using a national identity card embedded with a microchip, gain access to some 4,000 services, including banking, business registration and even fishing licenses. They review medical records and order prescriptions on smartphones. Almost everyone files taxes on the web within minutes, and about a third of voters now cast their ballots online.
By MARK SCOTT OCT. 8, 2014
While Europe and the United States debate the role of technology in people’s daily lives, Estonia has welcomed it as a fact of life, largely shooing away concerns about data privacy that have become hot-button issues elsewhere. In the last 23 years, Estonia, a Baltic country, has transformed from being a member of the Soviet bloc to one of the most connected countries, using technology built primarily within its borders.
Taavi Kotka, Estonia’s chief information officer, in Tallinn, the capital.CreditFabian Weiss for The New York Times
The rest of the world — particularly Europe — has taken notice. The country’s former prime minister, Andrus Ansip, has been tapped to become the new European Commission vice president in charge of Europe’s digital future. If he is confirmed for the job by Europe’s lawmakers, he will face pressure to improve online privacy and give people greater control over their information, which stands somewhat at odds with Estonia’s approach to digital services.
During a three-hour nomination hearing in Brussels on Monday, Mr. Ansip trumpeted his support for Europe’s privacy agenda.
“We have to protect everyone’s privacy,” he said. “Trust is a basic principle. If people can’t trust e-services, they will never use them.”
But he also pushed the upside of going digital. “I know from personal experience that paperless government can work,” he said.
With a population of 1.3 million, about the same as in Dallas, Estonia faces fewer challenges than bigger countries like Britain and the United States when introducing online services. And while it remains uncertain whether other countries can follow Estonia’s path, it is clear Estonia has little desire to turn back.
“Digital services have changed our lives,” said Taavi Roivas, who recently succeeded Mr. Ansip as prime minister. “It’s easier to communicate with the state, and there’s a lot less bureaucracy.”
The transformation has been made on a small budget. The country spends about 50 million euros, or $63 million, a year on information technology, far from the $700 million spent on HealthCare.gov, the online health insurance marketplace in the United States. Most of the money goes to local companies, some of which began in local research centers started in the Soviet era.
In large part, Estonia’s decision to go digital also has been driven by one basic fact: It had no other choice.
When the Iron Curtain fell, Estonia had few financial resources and a small population to jump-start its economy. Local policy makers also soon realized that they could not offer Western-style services without using new technology, including the Internet, that could keep government costs at a bare minimum.
“Luckily, Estonia was never a rich country,” said Priit Alamae, chief executive of Nortal, a local company that built much of the technology powering Estonia’s digital services. “We’re like a working-class child and had to earn everything on merit.”
While Estonia’s online services have expanded rapidly, the system still relies on two staples.
All Estonians are issued an identity card at 15, which includes a microchip that holds personal information and allows access to government and commercial services. To keep records safe, each card uses a personal identification number that must be correctly entered before using the digital offerings. The numbers are much harder to compromise than signatures and other forms of online security, analysts say.
Estonia also relies on a government-run technology infrastructure, called X-Road, that links public and private databases into the country’s digital services. All personal information is kept on separate servers and behind distinct security walls of government agencies, but the system allows the state and businesses like banks to share data when individuals give consent.
Estonia’s willingness to use digital products sets it apart from France and Germany, where people have objected to keeping data online. Estonians have embraced the concept. The country’s systems have recorded few serious security breaches that could test people’s faith. And many residents say the online services are more secure and more convenient than traditional methods of dealing with the government.
Now, about 98 percent of people file their income taxes online through an automated system that takes roughly five minutes to complete, said Marek Helm, who leads Estonia’s tax and customs authority. That has increased overall tax compliance, cut his agency’s staff in half, to 1,500 employees, and allowed the government to issue tax refunds within a week.
The transition to a digital life has come with a few hiccups.
Estonia’s online medical portal routinely crashed after digital prescriptions were introduced in 2010 because retirees — the main users of regular prescriptions — kept signing into the system to renew their medication on the day they all received monthly social security payments. And some local politicians have voiced concerns that the introduction of Internet voting in 2005 has led to suspicions of election fraud.
But Estonians largely view the country’s digital services as the standard way of interacting with the government and local companies — a far cry from the rest of Europe. Citizens are more concerned about frequent government requests for online information than they are about privacy, said Siim Sikkut, a technology adviser to the Estonian government. To prevent people from being bombarded for information, Estonia passed a law that required the authorities to ask only once for specific data, like someone’s date of birth. That means local agencies and companies are legally obliged to share basic information when requested, to make it easier for people to use online services.
“If we had a centralized system, it would be a privacy concern,” said Taavi Kotka, Estonia’s chief information officer, during a recent walk through the picturesque center of Tallinn. “But nobody has the whole picture. Everything is separate, but connected.”
The country now wants to take its digital services global by signing up people living outside Europe for so-called “e-residency” that would give people anywhere in the world access to Estonia’s public and private online services.
The upside, Estonians say, is convenience.
“I can’t imagine doing things the old-fashioned way,” said Priit Heinla, 27, a project manager for an energy company who regularly signs documents with digital signatures on computers or mobile devices.
“You don’t have to sign a mountain of paperwork,” he said. “It’s just one signature and you’re done.”
A version of this article appears in print on October 9, 2014, on page B1 of the New York edition with the headline: Estonians Embrace Life in a Digital World. Order Reprints|Today’s Paper|Subscribe