A smart contract is a self-executing contract with the terms directly written into code on a blockchain. Unlike traditional contracts, smart contracts automatically enforce and execute agreements when predefined conditions are met, eliminating the need for intermediaries. They are utilized in various applications, such as facilitating transactions, managing supply chains, and automating processes without requiring human intervention. By providing transparency, security, and efficiency, smart contracts significantly reduce the time and costs associated with contract execution while ensuring trust between parties.