A smart contract is a self-executing contract with the terms of the agreement between buyer and seller being directly written into lines of code. The code and the agreements contained therein exist across a distributed, decentralized blockchain network. The code controls the execution, and transactions are trackable and irreversible, ensuring a high level of security and trust in the process[6].
Smart contracts are essentially programs stored on a blockchain that run when predetermined conditions are met. They automate the execution of an agreement so that all participants can be immediately certain of the outcome, without any intermediary's involvement or time loss. This automation can trigger subsequent actions, such as transferring funds, registering a vehicle, sending notifications, or issuing a ticket, once the conditions of the contract are met[14].
Introduced by Nick Szabo in 1994, smart contracts were designed to execute the terms of a contract using computerized transaction protocols and a distributed ledger, aiming to reduce the need for trusted intermediaries, arbitration costs, and fraud losses[2]. Ethereum, launched in 2015, popularized smart contracts by providing a platform that supports them, enabling developers to create more complex and functional applications that go beyond simple transactions[1].
Smart contracts are trustless, meaning they do not require trust in a third party for the contract to be executed. They are autonomous, as they automatically execute the contract terms when the conditions are met; decentralized, as they operate on a blockchain network that is not controlled by any single entity; and transparent, with the contract terms being visible to all relevant parties. Once deployed, smart contracts are irreversi...
