The concept of smart contracts didn't originally emerge in the context of blockchain, but was defined by computer scientist and expert cryptographer Nick Szabo in 1994 as a series of commitments inThe concept of smart contracts didn't originally emerge in the context of blockchain, but was defined by computer scientist and expert cryptographer Nick Szabo in 1994 as a series of commitments in
Learn/Cryptocurrency Knowledge/DeFi/What are Smart Contracts?

What are Smart Contracts?

Author: MEXC
Jul 16, 2025MEXC
0m
#Basic#DeFi#Beginners#Ethereum#Basic Concepts
Smart Blockchain
SMART$0.004547+0.19%
FORM
FORM$0.2981+2.79%
Griffin AI
GAIN$0.00274-4.26%
Moonveil
MORE$0.001426-1.79%
Wink
LIKE$0.00235+0.72%

The concept of smart contracts didn't originally emerge in the context of blockchain, but was defined by computer scientist and expert cryptographer Nick Szabo in 1994 as a series of commitments in digital form, including a set of protocols and the execution by the parties involved in the protocols.

However, it didn't gain much attention at that time until the birth of the decentralized, peer-to-peer transmission system of Bitcoin, and the emergence of programmable and immutable blockchain technology. These developments made the concept of smart contracts more than just a theoretical concept.

At the end of 2013, Vitalik Buterin released the Ethereum Whitepaper, and in subsequent years, he led the team in developing this decentralized smart contract application platform. It acts like an underlying operating system such as Apple's iOS or Android, providing a rich API interface for developers to quickly create various types of smart contracts and blockchain applications.

By now, the concept of smart contracts has become clearer: a smart contract is an immutable contract protocol written in code into a computer. When specific conditions agreed upon by the participants are met, the smart contract is executed.

1. Characteristics of Smart Contracts


In simple terms, a smart contract is a piece of computer program. It is not as intelligent as we might imagine, nor does it possess the legal enforceability of traditional contracts.

Deterministic: The result of executing the same smart contract is always consistent, even if it is executed on computers dispersed across different regions globally.

Open and Transparent: All terms and conditions within a smart contract are fully accessible and viewable by the participating parties.

Immutable: Once a contract is deployed, its contents cannot be altered. No party can interfere with the execution of the contract.

2. Lifecycle of Smart Contracts


Smart contracts are only executed when they are invoked by transactions. One contract can call another contract, and this calling can continue between contracts in layers. However, the execution of the first contract in this execution chain must be initiated by a transaction created by an external account. Smart contracts never run automatically or in the background. Without a triggering transaction, a contract remains in a state of waiting to be called.

The execution of transactions is a whole, and modifications to the global state will occur only after all executions have been confirmed successful. Confirmation of success means that the program's execution encountered no errors or termination conditions. If program execution terminates due to errors, all previous operations performed will be rolled back, as if that execution had never occurred.

3. Problems with Smart Contracts


As the use of smart contracts becomes increasingly widespread, people have also discovered that, much like contracts in the real world, if they are not carefully reviewed and verified, vulnerabilities can arise, leading to asset security concerns.

One of the most well-known incidents in Ethereum's history is TheDAO event. TheDAO was a decentralized autonomous fund project that raised over $150 million worth of Ether in just one month. However, within a month, a vulnerability in the token code led to a significant amount of funds being transferred out by hackers. Due to the immutable nature of smart contracts, the project team was powerless to intervene.

Even today, contract vulnerabilities continue to occur. However, these hacking incidents have made more developers realize that, just like contracts in the real world, if protocol processes are too complex, involving professional third-party audits is necessary.

4. Summary


Smart contracts replace third-party intermediaries with open, transparent, and immutable protocol codes, reducing trust costs for contract participants. They have a wide range of applications and prospects. While challenges in security auditing persist, it's important to recognize that the field is less than a decade old. Smart contract development is still in its early stages, and we believe wider market acceptance of smart contracts is only a matter of time.


Market Opportunity
Smart Blockchain Logo
Smart Blockchain Price(SMART)
$0.004547
$0.004547$0.004547
+0.26%
USD
Smart Blockchain (SMART) Live Price Chart

Popular Articles

Trade US Indices (NAS100, SP500, US30) with USDT on MEXC: Max 20x Leverage

Trade US Indices (NAS100, SP500, US30) with USDT on MEXC: Max 20x Leverage

The gap between Wall Street and Web3 just closed.MEXC is thrilled to announce the listing of USDT-Margined Perpetual Futures for the world's three most important financial indices: NAS100 (Nasdaq), SP

Author: MEXC
Why Smart Money Trades Copper (XCU) Perps on MEXC

Why Smart Money Trades Copper (XCU) Perps on MEXC

When investors think of Copper, they often think of physical bars or slow-moving ETFs. That is how the "Old World" trades.But for the modern crypto trader on MEXC, the launch of COPPER (XCU) USDT Perp

Author: MEXC
Staking Rewards Crunch,Why ETH Yields Can Fall Even When Activity Looks “Fine”

Staking Rewards Crunch,Why ETH Yields Can Fall Even When Activity Looks “Fine”

Ethereum staking rewards come from a mix of protocol issuance (new ETH minted) and variable fee-driven components (priority fees and MEV). Over the past two years, the composition of that mix has shif

Author: MEXC
NFT Market Radar: Utility Narratives Re-enter the Conversation (Late Jan 2026)

NFT Market Radar: Utility Narratives Re-enter the Conversation (Late Jan 2026)

Scope note (what this piece is—and isn’t)This “radar” summarizes what three recent articles reported about NFT-adjacent tokens and utility-themed use cases around mid-to-late January 2026. It does not

Author: MEXC

Hot Crypto Updates

View More
On-Chain Data Reveals: Why Are Whales Accumulating BEEG in Q1 2026? Complete Smart Money Tracking Guide

On-Chain Data Reveals: Why Are Whales Accumulating BEEG in Q1 2026? Complete Smart Money Tracking Guide

In-depth analysis of BEEG on-chain data in 2026: Whale addresses continue accumulating, holder count hits all-time high. Learn how to use Whale Tracking tools to follow smart money. Discover why

2026 Ultimate Guide to Gold Gifting: Which Offers Better Value—PAXG, XAUT, or Physical Gold Bars?

2026 Ultimate Guide to Gold Gifting: Which Offers Better Value—PAXG, XAUT, or Physical Gold Bars?

Discover why smart gifters in 2026 choose tokenized gold (PAXG, XAUT) over physical bars. Learn about fractional ownership, instant transfers, transparent verification, and why MEXC offers the best

XRP Price Prediction 2026: Why Seasoned Traders Choose MEXC to Position for XRP's Next Bull Run

XRP Price Prediction 2026: Why Seasoned Traders Choose MEXC to Position for XRP's Next Bull Run

In-depth XRP price prediction analysis for 2026 reveals why smart traders choose MEXC. Zero trading fees, deep liquidity, and 100x leverage help you capture XRP's potential growth from $2 to $5. Key

Why Are Sui Whales Secretly Accumulating BEEG? In-Depth On-Chain Data Analysis for 2026

Why Are Sui Whales Secretly Accumulating BEEG? In-Depth On-Chain Data Analysis for 2026

Comprehensive analysis of BEEG on-chain data and whale movements. Discover why smart money is accumulating BEEG, explore whale tracking techniques, deflationary mechanisms, and why MEXC is the best

Trending News

View More
Binance BEP20 Suspension: Essential Maintenance Update for January 23

Binance BEP20 Suspension: Essential Maintenance Update for January 23

BitcoinWorld Binance BEP20 Suspension: Essential Maintenance Update for January 23 Global cryptocurrency exchange Binance has announced a temporary but essential

Ethereum Staking Breakthrough: Buterin’s Crucial DVT Proposal to Slash Validator Penalties

Ethereum Staking Breakthrough: Buterin’s Crucial DVT Proposal to Slash Validator Penalties

BitcoinWorld Ethereum Staking Breakthrough: Buterin’s Crucial DVT Proposal to Slash Validator Penalties In a pivotal move for the world’s leading smart contract

Beko’s Smart Living Index finds Economic Pressure Drives Surge in Sustainable Living

Beko’s Smart Living Index finds Economic Pressure Drives Surge in Sustainable Living

ISTANBUL, Jan. 22, 2026 /PRNewswire/ — Beko, the leading global home appliance company, today unveiled its proprietary Smart Living Index (SLI). The study revealed

XRP Price Prediction: Can Ripple Really Become A $10 Crypto or Are Smart Whales Diversifying to More Lucrative Opportunities?

XRP Price Prediction: Can Ripple Really Become A $10 Crypto or Are Smart Whales Diversifying to More Lucrative Opportunities?

Few debates in crypto spark as much emotion as XRP price prediction. For years, Ripple supporters have argued that a $10 XRP isn’t just possible; it’s inevitable

Related Articles

What are Miner Fees and Gas Fees?

What are Miner Fees and Gas Fees?

1. What are Miner Fees and Gas Fees?Gas is a unit of measurement in the Ethereum protocol. It quantifies the computational and storage resources required to execute specific operations on the Ethereum

Author: MEXC
What is Decentralized Finance (DeFi)?

What is Decentralized Finance (DeFi)?

In 2020, DeFi began to flourish, and in 2021, DeFi Summer ignited the market. In 2022, the total value locked reached a historic high of $219.47 billion. So, what exactly is decentralized finance?1. W

Author: MEXC
What is ETH 2.0?

What is ETH 2.0?

ETH 2.0 represents an upgraded version of Ethereum, building upon the initial Ethereum version that debuted in 2015, making the platform now 8 years old.The most notable distinction between ETH 2.0 an

Author: MEXC
What is Decentralized Lending?

What is Decentralized Lending?

Similar to DEXs, decentralized lending is also one of the key components of DeFi. If the DeFi Summer of 2020 was fueled by competition among various DEXs, triggering a liquidity race, then the integra

Author: MEXC
Sign Up on MEXC
Sign Up & Receive Up to 10,000 USDT Bonus