A smart contract is a self-executing program that automates the actions required in an agreement or contract. It is a computer program or protocol for automated transactions that are stored on a blockchain and run in response to meeting certain conditions. Smart contracts are simply programs stored on a blockchain that run when predetermined conditions are met. They work by following simple “if/when…then…” statements that are written into code on a blockchain. Smart contracts automate the execution of an agreement so that all participants can ascertain the outcome as soon as possible without the involvement of an intermediary or time delay.

Smart contracts are coded and stored on the blockchain, and they automate agreements between the creator and recipient, making them immutable. They are self-executing contracts in which the contents of the buyer-seller agreement are inscribed directly into lines of code. Smart contracts execute exactly as they are set up by their creators, and they are enforceable by code. Smart contracts support multi-signature accounts to distribute funds as soon as all the parties involved confirm the agreement.

Smart contracts are apps on a blockchain that make each side of a transaction complete its part. They permit trusted transactions and agreements to be carried out among disparate, anonymous parties without the need for a central authority, legal system, or external enforcement mechanism. Smart contracts expand on the basic idea behind Bitcoin to make it possible to securely automate and decentralize virtually any kind of deal or transaction, no matter how complex.

Smart contracts offer various benefits, including speed, efficiency, accuracy, trust, transparency, security, and savings. They eliminate the need for intermediaries such as brokers to validate signed legal contracts, reducing the risk of third-party manipulation. Smart contracts leverage computer protocols to automate actions, streamlining various commercial processes and saving valuable time.