Glossary
Smart Contract
A smart contract is a program stored on a blockchain that runs automatically when its predefined conditions are met. It lets parties transact by trusting shared code and network rules rather than an intermediary.
The close-up. A smart contract is simply code deployed to a blockchain, where each function executes exactly as written and the same for everyone. Once deployed, it typically cannot be quietly altered, and every interaction is recorded on the public ledger. When someone sends a transaction that meets the contract's conditions, the network runs the logic and updates balances or state — moving tokens, minting an NFT, or unlocking access — without a person approving each step. Running that logic consumes network resources, which is why users pay a gas fee.
The wide shot. Smart contracts turn agreements into infrastructure. They are the building blocks of decentralized finance, marketplaces, and DAOs, letting strangers coordinate through transparent, verifiable rules instead of a trusted middleman. That openness is also the risk: because the code is public and hard to change, a bug or overlooked edge case can be exploited, and there is no support desk to reverse a loss. Serious projects lean on audits, testing, and careful design to reduce that exposure.
Smart contracts are foundational to many networks and crypto assets, though capabilities differ by chain. Understanding how they work — and where they can fail — is core to reading this space with clear eyes. This is informational only, not advice; always do your own research.