What it means
Code and state
On Ethereum, a contract has code and state at an address. Transactions can invoke its functions, and other contracts can interact with it. These rules can implement token transfers, account permissions or payment conditions.
What the program cannot promise
A smart contract executes the logic that was actually deployed, including bugs and administrative powers. External facts require a defined input mechanism, often an oracle or authorized operator. Contract execution alone does not establish that a real-world service was delivered, a legal obligation is enforceable or an asset is fairly priced.
Related concepts
In practice
A concrete example
An escrow-style program releases tokens when its coded condition is met; the design still needs a way to establish whether an off-chain delivery occurred.
Technical notes & boundaries
A smart contract is not automatically a legal contract. Audits, upgrade controls and dependencies must be assessed for the particular deployment.
Go to the source.
Original references used for this definition. Product details and standards can change.
