The emergence of Cryptocurrencies and Blockchain technologies has introduced many new things to the world. Smart Contract is one of the most popular topics that has emerged among them. A Smart Contract is a self-executing and self-enforcing contract used mostly in the blockchain sector. Nick Szabo, who invented the first virtual currency called “Bit Gold” in 1998, defined a Smart Contract as computerized transaction protocols that execute the terms of a contract.
The terms of the agreement between the two parties, i.e, the buyer and the seller, are written into lines of code. The code and the terms of agreement exist within a distributed and decentralized blockchain network. The code itself controls the execution of the contract which is only successful when all the terms and conditions are met. The transactions through such a smart contract are trackable as they are embedded into a code. The transactions that take place through a smart contract are irreversible and transparent.
Smart contracts operate on blockchain technology and allow transactions as well as agreements to be carried out. These contracts do so without the need of a central entity, external enforcement, or legal system.