The concept of the “smart contract” emerged several years ago. The idea is that a computer algorithm completely eliminates the human factor in business transactions. In particular, the smart contract eliminates the possibility of fraud, mistakes, intermediaries, and reduces costs.
Smart contracts started to be talked about in October 2016. At that time, the news broke that 88 bales of cotton worth $35,000 were delivered from the U.S. to China without human intervention, using computers, or, more precisely, a smart contract.
According to Nestor Dubnevich, senior lawyer at the Juscutum Lawyers Association, the world has seen several other similar cases of smart contracts, but their share in the smart contract sphere is 0.0001%.
The rest of the smart contracts cases are related to ICOs.
Dubnevich talks about the case of the ZrCoin project. It raised $1.4 million worth of cryptocurrency in 24 hours after the start of the ICO. The idea of the project was to tokenize the release of zirconium as a result of recycling garbage and secondary products. The smart contract involved the autonomous transfer of the token to investors and the distribution of the plant’s revenues among investors.
2017 saw the heyday of the idea of tokenization through ICOs and smart contracts. The most popular projects were those related to the tokenization of gold as the most liquid and stable in price commodity.
Alternative energy was also tokenized, justifying it by the unprecedented growth of world investments in this sphere, tokenized square meters of real estate and barrels of oil.
The declared idea of all projects by their authors was to collect investments from cryptocurrency owners with the prospect of multiplying funds and distributing profits among depositors.