What is a Smart Contract?

Ethereum is known as a “smart contract platform,” which simply means it’s an environment where software programs (called smart contracts) can be run.

What is a Smart Contract?

Smart contracts are automated computer programs that live and execute on a blockchain. Despite the name, smart contracts aren’t necessarily “smart” or legally binding in the traditional sense. A more accurate term would be “automated programs.”

The term was coined by Nick Szabo in the late 1990s. He compared smart contracts to vending machines: you insert coins, and the machine automatically delivers your chosen item. No intermediaries. The machine self-executes upon receiving payment.

In the same way, a smart contract on a blockchain executes automatically when predefined conditions are met. The code contains these conditions—similar to terms in a traditional contract—and runs autonomously when triggered.

On Ethereum, smart contracts are:

• Collections of code and data
• Stored at specific blockchain addresses
• Deterministic, meaning they always produce the same outcome for the same inputs

What is the Ethereum Virtual Machine (EVM)?

The Ethereum Virtual Machine (EVM) is the core engine that executes smart contracts on Ethereum.

A virtual machine acts like a computer within a computer. Since every Ethereum node may use different hardware or operating systems, the EVM ensures consistency by providing a universal environment.

This means:

• Smart contracts can run on any device using Ethereum, regardless of OS
• Developers can write a contract once and deploy it anywhere (“Write once, run anywhere”)

Key Benefits of EVM:

• Device-Agnostic: No need to rewrite code for different systems.
• Universal Execution: Contracts behave the same no matter the machine.
• Turing-Complete: In theory, the EVM can perform any computable task.

Smart Contract Development:

• Written in high-level programming languages like Solidity, Vyper, or Serpent
• Compiled into bytecode that the EVM can understand
• Deployed and stored on the Ethereum blockchain

Thanks to the EVM, Ethereum enables not just smart contracts but also decentralized applications (dApps) that can operate autonomously and securely on the blockchain.

In short, smart contracts + EVM = the foundation of Ethereum’s decentralized computing power.