It is a piece of software containing a programmed set of rules and regulations guiding contract negotiations, verifying the contract automatically and enforcing the terms upon which the contract was set.The native language of Ethereum called Solidity is used in writing the code of smart contracts.These codes self-execute the terms of the contract once the conditions in which they are set to have been met.
Once the contract is successfully executed, the digital asset is distributed according to the logic defined in the code.How Ethereum Smart Contract Works?To explain in simple terms, liken it to the technology of a vending machine, the most primitive form of smart contracts.
You get a receipt that is held in a virtual contract.
The Ethereum blockchain holds the fund pending when the digital entry key sent by the seller gets to you at a specified date.
If the key doesn’t come on time, the blockchain issues a refund.
However, if the key is received before the rental date, the function triggers the release of the fee and key to the buyer and seller on the agreed date.The system works on a contract that self-executes the “if-this-then-that” conditions which have been coded onto it and witnessed by hundreds of people.