Programmatic rules executed by the blockchain to enforce agreements without intermediaries.
A smart contract is code that runs deterministically on a blockchain to enforce rules or automate actions. On account-based chains (e.g., Ethereum), contracts are programs with persistent state. On UTXO chains (e.g., Bitcoin Cash), contracts are enforced via script conditions that must evaluate to true for spending.
"An escrow contract holds funds until both parties provide signatures or a timeout passes, at which point funds are refunded."
Smart contracts are transparent and immutable once deployed, which reduces counterparty risk but introduces the risk of bugs. Audits, formal verification, and fail-safes (like time locks and multi-sig) help mitigate issues.
"A timelocked refund branch protects users if a counterparty disappears, allowing recovery after a deadline."
All terms and definitions may update as the Cryptionary improves.