A smart contract is a computer algorithm that monitors the terms of compliance with a transaction in the blockchain. Each contract consists of a code containing certain conditions, upon fulfillment of which a predetermined result will be achieved. At the same time, the process is automated and excludes the participation of a third party.

Smart contracts are not legally binding. However, they guarantee transparency and reliability of the transaction, since they work on decentralized digital registries, which means they are not controlled by an administrator or an organization.