A digital contract that contains the terms of agreement in the form of code.
The Long Explanation
Like any traditional contract, a smart contract lays out the terms of a deal or agreement. It is “smart” because the terms of the agreement are self-executing in the form of code, not your usual paper agreement sitting on a desk, running on a blockchain like Ethereum. And since it runs on a blockchain platform, no middle men are required to perform transactions.
Smart contracts have two basic characteristics – they can send and receive transactions, and they cannot be altered.
The basic idea behind smart contracts is to securely decentralize and automate any type of transaction or deal, regardless of its complexity. Also, since they are based on a blockchain, they offer a great level of reliability, security, and easy accessibility.