Smart Contract

Definition

A smart contract is a self-executing program stored on a blockchain that automatically enforces the terms of an agreement when predetermined conditions are met. First conceptualized by Nick Szabo in 1994, smart contracts became practical with Ethereum's launch in 2015. They eliminate the need for intermediaries by executing transactions automatically — for example, releasing payment when goods are delivered, or distributing insurance payouts when flight delays occur. Smart contracts are immutable once deployed, meaning their code cannot be changed. They power DeFi protocols, NFT marketplaces, DAOs, and token launches. Vulnerabilities in smart contract code have led to significant hacks, making security audits essential.