What is a smart contract?
A smart contract is a program stored on a blockchain that runs as written when called, for example recording an event or transferring a record once set conditions are met. On Ethereum and compatible chains, smart contracts are usually written in Solidity.
Also called: self-executing contract
Why it matters
A smart contract can replace a middleman for rules that several parties must trust, such as a register of rights, delivery terms or royalty splits. Once deployed, code is hard to change and bugs are costly, so design, testing and an independent audit matter more than in a normal app. Plan upgrades and admin rights before launch.
1Not a legal contractIt is code that enforces rules on-chain; a legal agreement may still be needed alongside it.
2Kazakhstan’s Digital CodeTerms may be expressed in code if they can be reproduced in a form a person can read, and a person makes the final decision in a dispute (Article 67).
3Smart contract auditsAn independent review of the code for security flaws before deployment, often by a specialist firm.
ExampleA grain exporter and a buyer abroad record the stages of a delivery: a smart contract accepts signed confirmations from the laboratory, the carrier and the port, and marks when all the conditions for payment are met. The payment itself goes by bank transfer and the agreement stays on paper; the contract only records rules every party can see.
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Related terms
BlockchainA shared ledger copied across many computers, where records are added in blocks and cannot be quietly changed.DAppAn app whose core logic runs in smart contracts on a blockchain, used through a crypto wallet.TokenisationRepresenting rights to a real or digital asset as tokens on a blockchain that can be held and transferred.DAOA group that makes decisions and manages shared funds through token votes and smart contracts.Layer 2A network that runs on top of a blockchain such as Ethereum to make transactions faster and cheaper.
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