A smart contract is a program stored on a blockchain. It follows rules written in code and can run automatically when the required conditions are met.
What smart contracts do
Smart contracts can move tokens, record ownership, manage loans, run auctions, create NFTs, or enforce rules inside a decentralized app. They are especially important on Ethereum.
Why smart contracts are risky
Smart contracts can reduce the need for middlemen, but code mistakes can be costly. If a contract has a bug, attackers may exploit it before users can react.
Before interacting with a smart contract, check whether it is audited, widely used, and connected to a trustworthy project.