A smart contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist on a decentralized blockchain network, making it tamper-proof and immutable.
Smart contracts allow parties to automate the enforcement of contractual terms without requiring a third-party intermediary or central authority. They can be programmed to execute automatically when certain conditions are met, such as a particular date being reached or a certain amount of money being received.
The most well-known use case for smart contracts is in the realm of cryptocurrencies and decentralized finance (DeFi), where they are used to automate transactions, manage digital assets, and provide secure and transparent financial services. However, smart contracts have the potential to be used in a wide range of other applications, from supply chain management to voting systems to real estate transactions.
Overall, smart contracts offer a way to streamline and automate contractual agreements in a secure, transparent, and efficient way, without the need for intermediaries or third-party institutions.