Smart contracts: rules executed by code
What you will learn
Write an if–then rule for a game and describe what happens if the coded condition is wrong.
A smart contract is a program on a blockchain that executes defined rules when invoked.
A smart contract is not necessarily AI or a legal agreement. On Ethereum, an action can invoke code that validating nodes check under the same rules. This supports games, voting and conditional asset transfers. Code does not understand intentions: programming errors or broad administrator permissions can cause harm. A contract does not simply wake up on a clock; an action must invoke it, sometimes through an external automation service.
In a fictional game, a contract transfers a digital badge when three completed tasks are recorded. It checks the coded condition, not whether the player understood the material.
Write an if–then rule for a game and describe what happens if the coded condition is wrong.
Ethereum.org · Smart contracts ↗Check your understanding
What is a smart contract?
- An AI investment adviser
- A program executing rules on a network
- A legal promise of profit
Answer and explanation
A program executing rules on a network. Smart refers to programmed execution, not human judgment.
What can happen if a contract condition contains a bug?
- The code may perform an unwanted action
- The network always corrects the intended meaning
- Losses are impossible
Answer and explanation
The code may perform an unwanted action. Network validation does not guarantee that the programmed rules are appropriate.
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