A smart contract is a computer protocol that can be used to digitally facilitate, verify, or enforce the negotiation or performance of a contract. Smart contracts were first proposed by Nick Szabo in 1996. He defined a smart contract as "a computerized protocol intended to facilitate, verify, or enforce the negotiation or performance of a contract." Ethereum is a decentralized platform that runs smart contracts: applications that run exactly as programmed without any possibility of fraud or third party interference. In Ethereum, all smart contracts are stored publicly on every node of the network, which has the implications that they are very difficult to delete and that anyone can see them. The use of smart contracts can potentially revolutionize the way we interact with many different kinds of contracts, from financial instruments to intellectual property to voting systems. A smart contract is like a traditional contract in that it defines the terms of an agreement between two or more parties. However, a smart contract is also like a computer program in that it can automatically enforce the terms of the agreement. For example, a traditional contract might specify that one party will pay the other party $100 on December 1st. A smart contract could automatically transfer $100 from the first party to the second party on December 1st. Smart contracts can be used to automate a wide variety of tasks. For example, a smart contract could be used to automatically pay a contractor when a milestone is reached in a project, or to automatically refund a customer if a product is not delivered on time. In general, smart contracts can be used to automate any task that can be expressed in code. This means that the potential applications of smart contracts are limited only by our imagination.
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