Blockchain Developer Certification Practice Exam 2025 – All-In-One Guide to Master Your Certification!

A smart contract is designed to automate the execution of predefined rules and agreements directly on the blockchain without the need for intermediaries. By utilizing smart contracts, transactions involving cryptocurrency can trigger actions automatically when certain conditions are met. This feature enhances efficiency and trust among parties involved, as the contract's execution is guaranteed by the underlying technology of the blockchain, making it tamper-proof and transparent.

In contrast, encryption of transactions is an important aspect of securing data but does not define the purpose of a smart contract. The mining process, while crucial for validating and adding transactions to a blockchain, operates independently of smart contracts and is not their main function. Similarly, while speeding up network transactions is a desirable outcome in some blockchain implementations, it is not the primary role of smart contracts. Thus, the correct understanding of smart contracts centers on their ability to execute programmed rules and automate cryptocurrency movements efficiently.