How do Smart Contracts work in Blockchain?

Smart contracts are self-executing programs stored on a blockchain that automatically run when predefined conditions are met. They use blockchain consensus to provide a tamper-resistant execution environment where code, state changes, and transaction history are publicly verifiable. Instead of relying on a central intermediary, users interact with smart contracts through transactions that trigger deterministic logic.

A smart contract is a piece of code deployed to a blockchain network, where it receives inputs, executes predefined rules, and updates blockchain state. The term "contract" does not necessarily mean a legal agreement; it refers to programmable logic that enforces rules automatically.

Traditional applications usually run on central servers controlled by an organisation. Smart contracts run on a decentralised network of nodes, where each node independently verifies and executes transactions according to the blockchain's rules.

The basic lifecycle of a smart contract is:

1.…