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Definition: smart contract

An agreement recorded on a decentralized blockchain that automatically enforces some predefined arrangement, typically financial in nature. Using the Ethereum network, which is a general-purpose blockchain designed for this purpose, a smart contract can be used to exchange anything of value as well as self-execute when conditions are met such as a monetary amount has been accumulated or a date on the calendar has arrived.

Just like a bot or application running in a computer follows instructions, a smart contract executes its own programming code to perform an action. Smart contracts are traceable. verifiable and irreversible, which are the primary attributes of a blockchain architecture. See blockchain, Ethereum, blockchain oracle and bot.