smart contract
Smart contract (noun) means a program stored on a blockchain that carries out the terms of an agreement — releasing funds, transferring ownership — when it is called and its conditions are met. It does not run by itself: someone or something has to send a transaction that triggers it. Example: “The smart contract releases the deposit as soon as both signatures are in.”
How to use smart contract
Learner’s notesIn plain EnglishA small program on a blockchain that does something automatically when the agreed conditions are met.
A term of art. It is neither necessarily smart nor a contract in the legal sense, and lawyers often point this out.
"Automatic" is misleading. A smart contract only runs when a transaction calls it; it cannot watch the world and act on its own, and it cannot see anything outside the blockchain without an oracle feeding data in.
Trace the full origin ↓Fill the gap
Can you complete this real example?
The _____ releases the deposit as soon as both signatures are in.
Etymology
Coined by American computer scientist Nick Szabo in 1996.
Synonyms
View more →Related words
Rhymes for smart contract
See all rhymes for smart contract →Frequently asked questions
Is a smart contract a legal contract?
Not automatically. It is code that carries out steps when conditions are met; whether it also creates enforceable legal obligations depends on the law of the relevant country and on what the parties actually agreed. Some jurisdictions have started to address the question directly, but the two are separate ideas.
What happens if a smart contract has a bug?
Because the code runs exactly as written and typically cannot be changed after deployment, bugs can cause funds to be locked or drained, and transactions are generally not reversible. This is why projects commission audits before deploying, though audits do not guarantee the code is free of faults.
What is the difference between a smart contract and a dApp?
A smart contract is the program running on the blockchain. A dApp, or decentralised application, is the whole product, usually a website or app that gives people a friendly way to interact with one or more smart contracts underneath.
What is the meaning of smart contract?
"smart contract" (noun) means a program stored on a blockchain that carries out the terms of an agreement — releasing funds, transferring ownership — when it is called and its conditions are met. It does not run by itself: someone or something has to send a transaction that triggers it.