How do smart contracts work?

Smart contracts are computer programs that execute the terms of a digital agreement between two or more parties. They are written in code, hosted on the blockchain, and stored in a public ledger. A smart contract is activated when certain conditions are met, such as the purchase of an item or the satisfaction of an agreement. When these conditions are met, the smart contract will execute the terms of the agreement by transferring funds, updating data, or releasing digital assets. Smart contracts are self-executing and immutable, meaning they cannot be changed without all parties agreeing to the changes.