What is a smart contract in cryptocurrency?

A smart contract is a self-executing contract with the terms of the agreement directly written into lines of code. It operates on blockchain networks, particularly Ethereum, and automatically executes actions once predefined conditions are met. For example, a smart contract might automatically release payment once goods are delivered or execute a transaction once certain criteria are fulfilled. Smart contracts eliminate the need for intermediaries, such as lawyers or notaries, reducing costs and time delays. However, smart contracts require precise coding to avoid bugs or vulnerabilities, as errors can result in unintended consequences or loss of funds.