What Is a Smart Contract?

It is an electronic algorithm for signing self-executing contracts on a blockchain. A smart contract describes an agreement in a mathematical language, which allows for eliminating differences in the interpretation of its terms and third-party interference into the process of its execution. In other words, a smart contract enables parties to exchange assets with no need for an intermediary.

The idea of a smart contract was originally introduced by Nick Szabo in 1996. In practice, it was first technically implemented by Vitalik Buterin in his project Ethereum that was launched in 2013.