Smart contracts are computer programmes that are executed according to “if/when…then…” statements stored in a distributed ledger. When certain criteria are met and verified, the tasks are executed by a group of computers. This might include anything from issuing a ticket to registering a car to sending out reminders. When a transaction is finalised, the blockchain is updated to reflect the new information. This means the transaction is final and only authorised parties may see the results.

It is possible to include as many conditions in a smart contract as are required to guarantee the task is done correctly. To establish the terms, the parties must determine the blockchain’s method of recording transactions and accompanying data, reach a consensus on the “if/when…then…” rules that apply to those transactions, explore any possible exceptions, and create a system for resolving disputes.

Developers still have the option of making the smart contract from scratch, but there are a growing number of commercial options for doing so, including pre-made templates and interfaces for creating contracts online.