What is a Smart Contract ?

A smart contract, like any contract, lays out the rules for a deal. In contrast, however, a smart contract has terms written in code which runs on a blockchain like Ethereum. Using smart contracts, app developers can make apps that take advantage of the security, reliability, and accessibility of the blockchain while also providing complex peer-to-peer functionality. These apps can be used for everything from loans and insurance to logistics and games.

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Smart contracts are just like any other contract. They lay out the rules of an agreement or deal. When smart contracts are set up and run on a blockchain, instead of on paper, the terms are set and run as code. This makes them "smart." Smart contracts build on the basic idea of Bitcoin, which is that money can be sent and received without a "trusted intermediary," like a bank, in the middle. This makes it possible to securely automate and decentralize almost any kind of deal or transaction, no matter how complicated. Because they run on a blockchain like Ethereum, they are safe, reliable, and accessible from anywhere in the world.

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Smart contracts let developers make a wide range of apps and tokens that aren't owned by anyone else. The new financial tools, logistics, and game experiences all use them. They're stored on a blockchain like any other crypto transaction, and they're just like any other crypto transaction. In most cases, once a smart-contract app has been added to the blockchain, it can't be taken back or changed.

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Apps that use smart contracts are called "decentralized applications" or "dapps," and they include technology called "decentralized finance" (or "DeFi"), which aims to change the way banks work.