What is a Smart Contract?
What is a contract?
A contract is just an agreement between two parties.
A smart contract is an agreement between two parties on the blockchain.
What makes it smart?
Typically, a smart contract is enforced by a third party.
A "smart" contract is enforced by code living on the blockchain.
Why are smart contracts so useful?
Needing a third party in an agreement is often necessary. But third parties will need to be trusted and can often be expensive.
Using a smart contract as our third party will remove the need for trust and will also cut out the middleman so to speak.