A smart contract is a program in a blockchain that automatically carries out its built-in conditions when they are met.
In plain words
The simplest metaphor is a vending machine: put in the right input and you get the output with no salesperson. The code runs identically for everyone, and a deployed contract usually cannot be changed, so mistakes in it are costly. Smart contracts underlie tokens (ERC-20, TRC-20), exchanges and lending protocols. A “smart contract” is not necessarily a legal contract: its legal status depends on the law.
Sources
- ethereum.org: Smart contracts — Smart contracts page. Checked 14.10.2026.
Example. The USDT token on the Ethereum network is a smart contract: it stores the balances and the transfer rules, and your wallet simply calls its functions.