What is Smart Contract?
A smart contract is a self-executing program stored on a blockchain that automatically enforces the terms of an agreement when predefined conditions are met, without requiring intermediaries.
What is a Smart Contract?
A smart contract is a program that runs on a blockchain and automatically executes actions when specific conditions are met. The term was coined by computer scientist Nick Szabo in 1994, but became widely used with Ethereum's launch in 2015.
How Smart Contracts Work
Smart contracts are written in languages like Solidity (Ethereum) or Rust (Solana). Once deployed, the code is immutable and executes deterministically — every node in the network runs the same code and reaches the same result.
Real-World Examples
- DeFi: Automated lending and trading without banks.
- NFTs: Ownership transfer and royalty distribution.
- DAOs: On-chain governance voting.
- Insurance: Automatic payouts when oracle-verified events occur.
Limitations
Smart contracts are only as good as the code they contain. Bugs can lead to hacks (e.g., the 2016 DAO hack). Audits by security firms are essential before deploying high-value contracts.