Smart contracts are self-executing agreements with the contract terms written in code and deployed on a blockchain. They operate on an “if-then” logic: when predefined conditions are met, the contract automatically triggers an action without the need for intermediaries.

On blockchains like Ethereum, smart contracts are written in programming languages such as Solidity. Once created, the contract is uploaded to the blockchain, where it becomes immutable and transparent. Anyone can view the code and verify its logic, but the contract itself cannot be altered once deployed.

When a user interacts with a smart contract, such as sending tokens or calling a function, the transaction is broadcast to the network. Miners or validators then verify and execute the transaction based on the contract’s logic. If the conditions are met, the contract automatically performs the required action—such as transferring funds, issuing a token, or updating a record.

Smart contracts eliminate the need for centralised enforcement, reducing costs and increasing trust in decentralised applications (dApps). They are widely used in decentralised finance (DeFi), NFT platforms, and supply chain systems. However, they require careful coding and auditing, as bugs or vulnerabilities can be exploited and cannot be reversed once on the blockchain.