Smart contracts are self-executing contracts with the terms of the agreement directly written into code. They operate on blockchain technology, which provides a decentralized and tamper-proof environment for executing transactions. Smart contracts automatically enforce and execute contractual agreements when predetermined conditions are met, eliminating the need for intermediaries. This technology enhances transparency, trust, and efficiency while reducing the risk of fraud and litigation. Applications of smart contracts can be found in various sectors, including finance, supply chain, and real estate, fundamentally changing how transactions are conducted.