Smart contracts are automated commands written in the form of "if" statement code, running on the blockchain, including the terms and outcomes of contracts. They are advanced and secure versions of traditional contracts, capable of being automatically designed and executed without human intervention. Once the terms are met, smart contracts automatically fulfill the contract and allocate the determined results to the relevant parties.
In simple terms, smart contracts are deterministic programs that execute specific tasks when certain conditions are met. They are neither legal contracts nor intelligent; they are simply pieces of code running in a blockchain distributed system.
Features#
Automation: Smart contracts automatically execute corresponding operations once trigger conditions are met.
Immutable: Once deployed on the blockchain, smart contract code and state cannot be changed, ensuring transaction transparency and security.
Transparency: All transactions and execution processes are recorded on the blockchain, visible to anyone, increasing trust.
Reduced intermediaries: Smart contracts reduce reliance on intermediary institutions, lowering costs and transaction times.
Example#
A simple smart contract could be as follows: Suppose there is a smart contract based on the Ethereum blockchain for house rental. When the tenant pays the rent, the smart contract automatically sends the digital key code to the tenant. The entire process does not require intermediaries and transaction records are permanently stored on the blockchain, ensuring transparency and security.