Smart contract

Smart contracts execute automatically on the blockchain

Smart contracts are computer programs or transaction protocols that automatically execute events and actions according to the terms of a contract. They are designed to reduce the need for trusted intermediaries, arbitration costs, and fraud losses. Smart contracts are commonly associated with cryptocurrencies and are a fundamental building block for decentralized finance (DeFi) and non-fungible token (NFT) applications.

Example

A smart contract on Ethereum can automatically transfer cryptocurrency from one party to another when certain conditions are met, without the need for a third-party intermediary.

Remember this

Understanding smart contracts is crucial for grasping the potential of decentralized finance and the broader implications for traditional financial systems.

Text adapted from Wikipedia, licensed under CC BY-SA 4.0.

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Educational content, not financial advice.

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