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Crypto Terms:  Letter S

What is Smart Contract?

Meaning:
Smart Contract - a self-executing computer program used to verify transactions on the blockchain.
easy
2 minutes

Let's find out Smart Contract meaning, definition in crypto, what is Smart Contract, and all other detailed facts.

A smart contract is a self-executing computer program used on blockchain networks to verify transaction agreements between buyers and sellers. The contract is then distributed throughout the entire blockchain network. 

The code of the smart contract can only be executed when the conditions stated in the contract are met. This execution is irreversible, and it’s next to impossible to alter the smart contract.

Smart contracts allow for anonymous peer-to-peer transactions between two or more parties that may not find each other reliable. The use of smart contracts eliminates the requirement for third-party involvement during a transaction.

Using a smart contract is a lot like getting a drink from a coffee machine. You select the criteria or choose what drink you want, pay for it, and get a drink in an instant, rather than getting in touch with the distributor of the coffee machine to make a contract for a cup of cappuccino.

Neither you nor the hypothetical machine owner needs to know each other’s identity for the transaction to be deemed valid. The anonymity of smart contracts is particularly favored by proponents of decentralized systems and a free economy.

Smart contracts can also be used by businesses that employ private blockchain systems. A smart contract can act as a guarantee for both the customers and service providers that their assets will be protected if the deal falls out and the risk of financial loss is mitigated.