Smart contract
A program recorded on the blockchain that automatically executes programmed conditions without an intermediary.
A smart contract is code recorded and executed on the blockchain that automatically carries out a specified action once programmed conditions are met — for example, transferring funds once the other party provides proof of delivery. Once deployed on the network, such a contract runs on its own and usually can no longer be unilaterally changed.
Smart contracts are what power most DeFi applications, decentralized exchanges (DEXs), and NFTs — Ethereum was the first widely used blockchain to introduce them, though many other networks support them today as well.
Related terms
Blockchain
A distributed, immutable ledger of transactions jointly maintained by many independent computers (nodes) in a network.
DeFi (Decentralized Finance)
An ecosystem of financial applications running on blockchain via smart contracts, without banks or other central intermediaries.
DEX vs. CEX (decentralized vs. centralized exchange)
A DEX is an exchange running on smart contracts with no intermediary; a CEX is a traditional exchange run by a company, such as Binance or Kraken.
NFT (Non-Fungible Token)
A unique token on the blockchain that confirms ownership of a specific digital (or physical) asset — unlike cryptocurrencies, it isn't interchangeable 1:1.