What is a smart contract?

Smart contracts are simply coded instructions involving documentation on the blockchain network. Just like any contract, there are terms and smart contracts have blockchain technology to enforce and document. As we all know, the blockchain is permanent and cannot be erased. 

Here is a non-technical example of what a smart contract could look like: 

“I will mow your lawn every week for the next month for $20. If I do not mow your lawn, you do not have to pay me. But if I do mow your lawn, you will pay me $20 every week it is completed during the month. This contract will be enforced and documented on the blockchain”

In this example, the smart contract will make sure that the person mowing the lawn gets paid each week they complete mowing and ensure the contract ends at the end of the month. 

Smart contracts can be created without the need for intermediaries such as lawyers. This can be useful to facilitate multiple transactions within real estate, purchases, supply chain management, financial management, healthcare, government and so much more. Smart contracts do not have to be complicated. They can be as simple as winning first place in a game and being awarded a trophy. Odds are, if you are active in the crypto community, you have encountered a smart contract without even realizing it.