A smart contract is a computer protocol intended to digitally facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts allow the performance of credible transactions without third parties. These transactions are trackable and irreversible.
For example, a smart contract can be used to facilitate a real estate transaction. The contract would be coded with the terms of the agreement between the buyer and seller, such as the purchase price, closing date, and other details. The contract would be deployed on the blockchain, and once the buyer and seller both sign off on the agreement, the funds and title would be automatically transferred.