The term smart contracts refers to self-executing contracts with the agreement directly written into code and executed on a blockchain. They automatically enforce and execute contractual terms when predetermined conditions are met. By eliminating intermediaries, smart contracts enhance efficiency and reduce costs in transactions. Their transparent and tamper-proof nature increases trust among parties, as all terms are visible and participants cannot alter the agreement post-execution. Applications of smart contracts span various industries, including finance, supply chain, and real estate, revolutionizing how agreements are established and enforced.