What is Smart Contract?
Quick Answer
A smart contract is a self-executing contract with the terms of the agreement directly written into code.
" Think of smart contracts as vending machines for legal agreements: insert cryptocurrency, get your justice dispensed—no lawyer required. "
BORING DEFINITION
A smart contract is a self-executing contract with the terms of the agreement directly written into code. It automatically enforces and executes actions based on pre-defined rules and conditions without requiring an intermediary. Smart contracts are primarily used in blockchain environments to facilitate, verify, or enforce the negotiation or performance of a contract.
How Does Smart Contract Work?
Smart contracts are programs stored on a blockchain that run when predetermined conditions are met. They follow simple 'if/when...then...' statements that are written into code on a blockchain network. Once triggered by specific events, they execute transactions or operations automatically.
Why it matters: Understanding smart contracts is essential for investors as they offer increased security and efficiency in transactions while reducing reliance on intermediaries.
REAL WORLD EXAMPLE
> Alice uses a smart contract to sell her digital artwork. Once Bob sends the agreed cryptocurrency amount, the smart contract automatically transfers ownership of the artwork to Bob.
Frequently Asked Questions About Smart Contract
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