Smart contracts operate on a blockchain by automatically executing predefined terms of agreements when certain conditions are met. This self-executing code is stored on the blockchain, providing a transparent and secure way to facilitate transactions without the need for intermediaries. Each smart contract is immutable, meaning once deployed, the terms cannot be altered, ensuring this reliability. Their decentralized nature reduces the risk of fraud and enhances trust among parties. Smart contracts are widely adopted across various sectors, including finance, real estate, and supply chain, as they streamline processes, cut costs, and improve efficiency in contract execution.