What is a Smart Contract?

Smart Contracts

Smart contracts are self-executing automated digital contracts stored and operated in a distributed blockchain.

A smart contract is an event-driven program, with state, which runs on a replicated, shared ledger and which can take custody over assets on that ledger. 

(An excellent definition of a Smart Contract by Richard Gendal Brown)

 
Smart contracts refer to defined services which are enacted by code on a censorship-proof ledger system - the blockchain. 
Smart contracts are able to securely execute a wide range of services including for example, financial exchanges, voting systems, property (land) registers, crowdfunding platforms, insurance, decentralised auction sites, a decentralised personal identity system, other self-enforcing contracts and intellectual property.

Main features of smart contacts are:

Data Driven Verification
Smart Contracts provide proof of performance by tracking verifiable data, eliminating the risks inherent in traditional paper contracts.

Fully Automated Enforcement
Smart Contracts can be written to execute their own conditions, eliminating the risk of relying on someone else to follow through on their commitments.

Securely Stored in the Blockchain
Smart Contracts are self-executing contractual states, stored on the blockchain, which nobody controls and therefore everyone can trust.