There is no consensus on a standard definition of smart contracts.
It is essential to define what a smart contract is, and the following is my attempt to provide a generalized definition of a smart contract: A smart contract is a secure and unstoppable computer program representing an agreement that is automatically executable and enforceable.
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Dissecting this definition further reveals that a smart contract is, in fact, a computer program that is written in a language that a computer or target machine can understand.
Also, it encompasses agreements between parties in the form of business logic.
Another fundamental idea is that smart contracts are automatically executed when certain conditions are met.
They are enforceable, which means that all contractual terms are executed as defined and expected, even in the presence of adversaries.
Enforcement is a broader term that encompasses traditional enforcement in the form of law, along with the implementation of specific measures and controls that make it possible to execute contract terms without requiring any mediation.
It should be noted that true smart contracts should not rely on traditional methods of enforcement.
Why This Matters for Blockchain Technology
Instead, they should work on the principle that code is law, meaning that there is no need for an arbitrator or a third party to control or influence the execution of the smart contract.
Smart contracts are self- enforcing as opposed to legally enforceable.
This idea might be regarded as a libertarian’s dream, but it is entirely possible and is in line with the true spirit of smart contracts.
Moreover, they are secure and unstoppable, which means that these computer programs are required to be designed in such a fashion that they are fault-tolerant and executable in a reasonable amount of time.
Key Points to Remember
- Definition There is no consensus on a standard definition of smart contracts.
- It is essential to define what a smart contract is, and the following is my attempt to provide a generalized definition of a smart contract: A smart contract is a secure and unstoppable computer program representing an agreement that is automatically executable and enforceable.
- Dissecting this definition further reveals that a smart contract is, in fact, a computer program that is written in a language that a computer or target machine can understand.
- Also, it encompasses agreements between parties in the form of business logic.
Going Deeper: Advanced Concepts
These programs should be able to execute and maintain a healthy internal state, even if external factors are unfavorable.
For example, imagine a typical computer program that is encoded with some logic and executes according to the instruction coded within it.
However, if the environment it is running in or external factors it relies on deviate from the normal or expected state, the program may react arbitrarily or simply abort.
It is essential that smart contracts be immune to this type of issue.
Conclusion
Definition represents one of the many innovative layers that make blockchain technology so powerful and transformative. As distributed systems continue to evolve, a solid understanding of these core concepts becomes increasingly valuable — not just for developers, but for anyone building, investing in, or working alongside blockchain-powered systems.
Whether you are just starting your blockchain journey or deepening existing expertise, mastering these fundamentals gives you the tools to think clearly about decentralized systems and make smarter decisions in this rapidly evolving space.