GLOSSARY // Crypto
Smart Contract
A smart contract is a program stored on a blockchain that runs exactly as written when its conditions are met, with no one able to stop or alter it mid-flight. It is what lets a blockchain do more than move coins: it can hold funds, enforce rules, and pay out automatically.
The strength and the danger are the same thing — the code is the authority. There is no manager to override a bug and no way to claw back funds sent to a flawed contract. Audited, battle-tested contracts securing billions sit right next to hastily written ones that have been drained, and the chain treats both the same.
A contract holds a buyer's payment in escrow and releases it to the seller only once a delivery condition is confirmed on-chain. No escrow agent is involved, but if the contract's logic has a flaw, the funds can be taken and no one can reverse it.
Related terms
Educational only — not financial advice. Definitions simplified for clarity; markets are messier than definitions.