Smart Contract

A smart contract is a small program stored on a blockchain that automatically carries out an agreement when set conditions are met, without needing a middleman to enforce it. For example, it might release a payment the moment a delivery is confirmed, following its rules exactly as written.

It is like a vending machine: put in the right amount, make a choice and it delivers, with no shopkeeper required. Smart contracts matter because they can make certain deals faster and cheaper to enforce, though the code does precisely what it says, so a mistake in the rules is carried out too.