A smart contract is a self-executing contract with the terms of the agreement directly written into lines of code.
It is implemented on a blockchain platform, such as Ethereum. Smart contracts automate and enforce the negotiation and execution of agreements, without the need for intermediaries like traditional contracts.
Smart contracts contain a set of predefined rules and conditions that govern the actions and obligations of involved parties.
Once the conditions are met, the contract automatically executes the specified actions. These contracts are stored on the blockchain, making them transparent, immutable, and tamper-proof.
Smart contracts enable a wide range of decentralised applications (DApps) and provide various functionalities.
They can facilitate the transfer of digital assets, trigger actions based on specific events, distribute funds according to predefined rules, and enable complex multi-signature transactions.
For example, in a decentralised crowdfunding application, a smart contract could automatically release the raised funds to the project if a predetermined funding goal is reached by a certain deadline.
This eliminates the need for a trusted intermediary and ensures transparency and accountability.
Smart contracts have the potential to revolutionise many industries by automating processes, reducing costs, and enhancing security.
They are a fundamental building block of blockchain technology, enabling the development of decentralised applications and enabling the execution of trustless agreements.