What is a Smart Contract?

A smart contract is a program where the code itself is the agreement: when pre-defined conditions are met ("after date X, send Y tokens to address Z"), the contract executes automatically without an intermediary. Ethereum is the most established smart-contract platform, with contracts written in Solidity running on the EVM (Ethereum Virtual Machine). Solana's SVM, Sui's Move, and Cosmos's CosmWasm are the leading alternative VMs, each with their own language ecosystems. Once deployed, contracts have a fixed address and code that is typically immutable; proxy/upgrade patterns enable updates via an admin key but introduce centralization concerns. Security failures in contracts (reentrancy, integer overflow, broken access control) have caused historic losses (the 2016 DAO hack, the 2022 Ronin Bridge exploit). Serious protocols mitigate risk through independent audits, bug bounties, and formal verification. The entire Web3 stack — DeFi, NFTs, DAOs, on-chain games, automated markets — is built on smart contracts.