A smart contract is a self-executing contract with the terms directly written into code, enabling automated enforcement without intermediaries. It operates on blockchain technology, ensuring transparency, security, and trust among parties involved. Smart contracts automatically execute actions such as payments or data transfers once predetermined conditions are met. This technology reduces the risk of fraud and increases efficiency in various applications, including finance, supply chain management, and real estate. By executing contractual obligations automatically, smart contracts streamline processes and significantly lower transaction costs.