What is a Smart Contract?

A Smart Contract is self-executing code on blockchain that automatically enforces agreement terms without intermediaries.

A Smart Contract is a computer program deployed on blockchain that automatically executes, controls, or documents legally relevant events according to contract terms.

The concept was first proposed by Nick Szabo in 1994. Practical implementation came with Ethereum (2015), where complex logic can be written in Solidity.

Key advantages: (1) Automation—no intermediaries needed, (2) Immutability—code cannot be changed after deployment, (3) Transparency—anyone can verify the logic, (4) Determinism—same result with same inputs.

Used for: DeFi, NFTs, DAOs, asset tokenization, insurance, supply chain management.

🧒 Explain Like I'm 5

It's like a vending machine: you insert a coin (fulfill a condition), and the machine automatically dispenses the product (executes an action). Nobody can change the rules once the machine is installed!

❓ Frequently Asked Questions

Can a smart contract be changed after deployment?

By default—no. The code is immutable. However, upgradeable contract patterns using proxies allow logic updates while preserving the address and data.

What is gas in smart contracts?

Gas is a unit measuring computational resources for executing operations in a smart contract. Users pay gas fees in ETH for transaction execution.

What programming languages are used for smart contracts?

Solidity is the most popular language for Ethereum smart contracts. Other languages include Vyper (Python-like), Rust (for Solana), and Clarity (for Stacks). Each blockchain has its preferred languages.

How much does it cost to deploy a smart contract?

Deployment costs vary by blockchain and contract complexity. On Ethereum, it can range from $50 to $500+ depending on gas prices. Layer 2 solutions (Polygon, Arbitrum) offer much cheaper deployment, often under $1.

Can smart contracts have bugs?

Yes, smart contracts can have bugs or vulnerabilities. Famous examples include The DAO hack (2016, $60M stolen) and Parity wallet bug (2017, $280M frozen). This is why auditing by security firms is critical before deployment.