Smart contracts power DeFi, NFTs and tokens. Because they execute exactly as written and are hard to change, bugs or exploits can be costly — audits reduce but never remove this risk.
Key takeaways
- A smart contract is self-executing code on a blockchain that runs automatically once its conditions are met.
- Once deployed, contracts are usually transparent and hard to change, so bugs can be permanent and costly.
- They power much of decentralised finance, NFTs and DAOs by removing the need for a trusted intermediary.
Smart Contract — frequently asked questions
Is a smart contract a legal contract?
Not necessarily; it is code that enforces rules automatically and may or may not be legally binding in your jurisdiction.
Can smart contracts be hacked?
The blockchain itself is hard to alter, but flaws in a contract's code have led to major losses, so audits matter.
This definition is educational and not financial advice. Crypto is volatile and high-risk — always do your own research.
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