A smart contract is self-executing code stored on a blockchain that automatically enforces the terms of an agreement when predefined conditions are met, without requiring intermediaries.
Smart contract characteristics: Immutable once deployed, transparent and verifiable, automatic execution, trustless operation, and programmable money.
Common use cases include token creation and transfers, DeFi protocols (lending, DEXs), NFT minting and trading, DAOs and governance, and automated payments and escrow.
Smart contract security: Bugs can lead to significant losses, audits are essential but not foolproof, upgradeable contracts have trade-offs, and formal verification provides highest assurance.