Smart contracts are programs designed and stored on a blockchain that run when predetermined conditions are met. Smart contracts are used to automate the execution of an agreement between buyer and seller. They can also automate a workflow, triggering the next action when conditions are met.

A smart contract enables the code to run independently, with no third-party operators. For example, when placing an order on a decentralized exchange, the crypto you intend to buy/sell goes into a smart contract. The party on the other side of the trade also puts their crypto in the smart contract. When the prices match, the smart contract sends the funds to the appropriate parties based on their order.

Author: Jesse Jaffe

Editor: Randall Roland

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