Blockchain Developer Certification Practice Exam 2026 – All-In-One Guide to Master Your Certification!

A smart contract is best described as a self-executing contract with the terms of the agreement directly written into code. This definition captures the essence of what a smart contract does: it automatically enforces and executes the terms of a contract when predefined conditions in the code are met.

By being programmed into code on a blockchain, smart contracts eliminate the need for intermediaries, allowing for trustless transactions where the code itself ensures compliance and execution. This self-executing nature not only enhances the efficiency of transactions but also reduces the risk of disputes and the need for litigation, as the outcomes are predetermined by the code.

Other options, while related to concepts in blockchain and legal agreements, do not accurately depict what a smart contract is. A written legal agreement refers to traditional contracts, which lack the automated execution features of smart contracts. A type of decentralized finance application describes a broader category that can utilize smart contracts but doesn't define them specifically. Lastly, a method for securing blockchain data focuses on data integrity and security rather than the contractual and automated execution aspects that are central to a smart contract's functioning.