A smart contract, like any contract, establishes the terms of an agreement. But unlike a traditional contract, a smart contract’s terms are executed as code running on a blockchain like Ethereum.
Smart contracts allow developers to build apps that take advantage of blockchain security, reliability, and accessibility while offering sophisticated peer-to-peer functionality — everything from loans and insurance to logistics and gaming.
Just like any contract, smart contracts lay out the terms of an agreement or deal.
What makes smart contracts “smart,” however, is that the terms are established and executed as code running on a blockchain, rather than on paper sitting on a lawyer’s desk.
Smart contracts expand on the basic idea behind Bitcoin — sending and receiving money without a “trusted intermediary” like a bank in the middle — to make it possible to securely automate and decentralize virtually any kind of deal or transaction, no matter how complex.
And because they run on a blockchain like Ethereum, they offer security, reliability, and borderless accessibility.