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What is a smart contract?
A smart contract is a program stored on a blockchain at its own address, holding code and data. When someone sends it a transaction, it runs exactly as written — 'if this, then that' — without a person approving or interpreting the result.
What it means for you
Interactions with a smart contract are irreversible, and its code generally cannot be changed once deployed, so a bug or a malicious function stays in place. When a wallet asks you to sign a contract call, the raw data is not written for humans; signing it blind can authorise actions you did not intend.
How it works
A smart contract is an Ethereum account with code: it holds a balance and storage at its address but cannot start transactions; it runs only when a transaction or another contract calls it. Anyone can deploy one by writing it in a language such as Solidity, compiling it and paying gas. Contracts can call each other like open APIs, which lets applications build on one another. A contract is limited to 24KB and cannot read off-chain data without an oracle. ethereum.org compares it to a vending machine: the right input produces a fixed output.
Sources: ethereum.org: Introduction to smart contracts, ethereum.org: Smart contracts · checked 4 October 2026
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