What Is a Smart Contract?

Introduction to Automated Agreements

In the world of cryptocurrency, you often hear about revolutionary technologies, and smart contracts are at the forefront. But what are they? In simple terms, a smart contract is like a regular contract, but it's digital and self-executing. It's a program that runs on a blockchain and automatically enforces the terms of an agreement when certain conditions are met.

How Do They Work?

Imagine a vending machine. You insert money (condition 1), you select a product (condition 2), and the machine automatically gives you that product (enforcement). Smart contracts work similarly but for more complex digital transactions. As CoinDesk explains, these contracts are immutable and distributed, meaning they cannot be changed or tampered with once created.

Key Features

• Automation: They automatically execute when conditions are met.
• Security: They are encrypted and stored on a distributed ledger, making them very secure.
• Trust: They eliminate the need for a third-party intermediary, like a lawyer or a bank.

These features make them a powerful tool for various applications. If you want to dive deeper, you can read our guide on how blockchain technology works.