A smart contract is a self-executing contract with the terms of the agreement directly written into code. It operates on a blockchain, ensuring transparency and security. When specific conditions predefined in the contract are met, the contract automatically executes actions like transferring assets or updating records, without requiring intermediaries. This automation reduces the potential for disputes and fraud, streamlining processes such as transactions or partnerships. Smart contracts also enhance trust among parties, as all participants can verify outcomes on the blockchain. As a result, smart contracts facilitate faster and more efficient contractual agreements.