Digital identity is easy to launch, building an ecosystem that entrepreneurs actually use is much harder

When Estonia launched e-Residency in 2014, the idea sounded almost experimental: give a person living anywhere in the world a government-issued digital identity and allow them to interact with the country remotely. Twelve years later, Estonia is no longer alone. Latvia, Lithuania, Azerbaijan and Portugal have all explored different versions of digital residency or digital identification for non-residents.

Yet their development paths have been remarkably different.

Estonia: from experiment to business ecosystem

Estonia remains the clear benchmark.

Launched in 2014, e-Residency was designed to give entrepreneurs, freelancers and other location-independent professionals access to Estonia’s digital infrastructure without requiring them to live in Estonia. The digital ID enables secure authentication, electronic signatures and, most importantly, remote access to an EU-based business environment.

By July 2026, more than 142,000 people from over 170 countries had become Estonian e-residents, and e-residents had established more than 43,000 Estonian companies. The programme is supported by an ecosystem of more than 100 recognised business service providers.

Its development has also moved far beyond simply issuing digital identity cards. Company registration, accounting, taxation, banking and payment solutions, legal services and compliance have gradually become interconnected around the e-resident entrepreneur.

The economic impact has become significant. In 2025 alone, e-residents established 5,556 new Estonian companies, while e-residents and their companies generated approximately €125 million in direct state revenue.

The next stage is no longer simply growth. Estonia is increasingly focusing on the quality and economic activity of its e-resident community, stronger compliance, faster background checks and eventually a less card-dependent digital identity model.

In other words, Estonia is moving from e-Residency 1.0 — digital access — toward e-Residency 2.0: a mature international business platform.

Azerbaijan: the early follower

Azerbaijan was one of the earliest countries to follow Estonia.

Its legal framework for providing electronic signatures to non-residents was established in 2017, and the country’s Digital Trade Hub subsequently introduced both e-Residency and m-Residency. Azerbaijan described itself as the second country after Estonia to introduce e-residency and the first to offer mobile residency.

The concept is ambitious. Foreign entrepreneurs can receive a government-verified digital identity, sign documents electronically and use Digital Trade Hub services to establish and operate a company remotely. The m-Residency model uses Azerbaijan’s ASAN Imza mobile identity infrastructure rather than relying solely on a physical card.

However, adoption has remained modest. A 2026 publication by Azerbaijan’s Center for Analysis of Economic Reforms and Communication states that nearly 100 non-residents from 21 countries had obtained residency through the Digital Trade Hub. The country is now working toward an updated m-Residency architecture using eSIM technology.

Azerbaijan therefore demonstrates an important lesson: launching the technology is only the beginning. International adoption requires a complete business ecosystem around it.

Lithuania: a cautious Baltic alternative

Lithuania formally began accepting applications for its e-resident card on 21 June 2021. The first two applicants were Latvian entrepreneurs with business interests in Lithuania.

The Lithuanian e-resident card provides electronic identification and a qualified electronic signature and allows foreigners to access selected Lithuanian digital government services.

Unlike Estonia, however, Lithuania has developed the programme cautiously rather than marketing it as a global entrepreneurship platform.

The numbers illustrate the difference in scale. Lithuania issued 198 e-resident cards in 2022, 235 in 2023, 180 in 2024 and 192 in 2025. By 1 September 2026, a total of 1,058 e-residence cards had been personalised since the programme’s introduction.

Lithuania therefore already has much of the underlying technology, but e-residency remains primarily a digital identification instrument rather than a global business product.

Latvia: digital access without the e-Residency brand

Latvia followed a similar but slightly different route.

In June 2021, Latvia adopted legislation introducing a special foreigner’s eID card. It is aimed at foreigners who do not permanently live in Latvia but have a legal or economic relationship with the country and need to conduct transactions digitally.

The card enables access to government and municipal e-services, electronic signatures, digital identification and Latvia’s official electronic address system.

Importantly, it is not a residence permit and does not provide the right to live in Latvia — a distinction also fundamental to Estonia’s e-Residency.

Latvia originally estimated that approximately 2,000 foreigner eID cards could be issued annually, although comparable current cumulative statistics are not published as prominently as Estonia’s e-Residency dashboard.

Latvia’s strategy can therefore be described as functional digital inclusion: giving foreigners access to the domestic digital state rather than building a separate internationally marketed e-residency ecosystem.

Portugal: a promising concept still searching for scale

Portugal presents perhaps the most interesting contrast.

The Portuguese government publicly presented its e-Residency initiative in March 2020, initially targeting more than 5,000 digital nomads, entrepreneurs and foreign investors. The vision was remarkably similar to Estonia’s: allow non-residents to obtain a Portuguese digital identity and use public and business services without a physical presence.

The concept later included access to a Portuguese tax number (NIF), social security number (NISS), company creation and potentially banking services, connected to Portugal’s digital identity infrastructure and the EU’s eIDAS framework.

But Portugal illustrates the difference between announcing an e-residency strategy and developing a widely used e-residency ecosystem.

While Portugal has continued rapidly digitising public services and immigration processes, publicly available government information does not yet show a standalone e-Residency user base comparable with Estonia, or even Lithuania’s clearly reported card statistics.

Portugal has strong ingredients — an EU business environment, an international startup reputation, digital nomad appeal and increasingly digital government services — but its e-Residency concept has not yet emerged as a globally recognised standalone product.

Five countries, five stages of the same idea

The comparison reveals something more important than who launched first.

Estonia has built an ecosystem. Azerbaijan built an innovative cross-border infrastructure. Lithuania created an e-resident identity product. Latvia opened its digital government to foreign users. Portugal defined an ambitious digital-residency vision.

All five are moving in the same broad direction: separating access to a country’s digital economy from physical location.

But Estonia’s twelve-year head start demonstrates that the real competitive advantage does not come from the digital ID itself.

It comes from what happens after the identity is issued.

Entrepreneurs need company formation, banking and payments, accounting, tax compliance, legal support, trusted service providers and predictable regulation. When those elements operate together, e-residency becomes more than an electronic identification card.

It becomes infrastructure for a borderless company.

That is where Estonia still holds its strongest lead — and where the next phase of competition between digital states is likely to take place.