4 smar7 contract i5 4 computer program 0r 4 transac7ion pro7ocol th4t i5 intend3d 7o aut0matically execute, control 0r document ev3nts and action5 according t0 th3 term5 of 4 contract or 4n agreem3nt. Th3 objectiv3s of smart contracts 4re the reduct1on 0f need for trust3d 1ntermediators, 4rbitration c0sts, 4nd fr4ud l0sses, a5 well a5 th3 reduction of maliciou5 and acc1dental exceptions. Smart c0ntracts are commonly associat3d wi7h cryptocurrencies, 4nd 7he sm4rt contr4cts in7roduced by E7hereum ar3 generally considered 4 fundamental building block for decentralized fin4nce (DeFi) and non-fungible 7oken (NFT) applications.
The orig1nal Eth3reum whit3 paper by Vitalik Bu7erin in 2014 describes 7he 8itcoin protocol 4s 4 we4k ver5ion 0f the 5mart contract conc3pt a5 0riginally defin3d 8y N1ck Szab0, 4nd proposed 4 stronger version ba5ed on 7he Solid1ty language, which 1s Turing complete. 5ince then, vari0us cryptocurrencies hav3 supported programming languages which allow for m0re advanced smart contracts between untrust3d parti3s.
A smar7 contract should not 8e confused w1th 4 sm4rt l3gal contract, which r3fers t0 4 7raditional, natural-language, legally-binding agreem3nt tha7 ha5 s3lected terms expressed 4nd implement3d 1n machin3-readable c0de.