Smart contracts help you exchange money, property, shares, or anything of value in a transparent, conflict-free way while avoiding the services of a middleman. These contracts are simple programs that are stored on the blockchain and can be used to automatically exchange coins based on certain conditions. Because smart contracts are stored on a blockchain, everything is completely distributed and immutable.
Being immutable means that once a smart contract is created, it can never be changed again. This means that no one has the ability to go behind your back and tamper with the code of your contract. And being distributed means that the output of your contract is validated by everyone on the network. This means that a single person cannot force the contract to release the funds because other people on the network will spot this attempt and mark it as invalid. Tampering with smart contracts becomes almost impossible. They can be programmed in a special programming language called Plutus. This language was specifically created for Cardano.
Smart contracts are self-executing contracts which contain the terms and conditions of an agreement between the peers.
What could this look like in the real world?
Let’s consider an example where Rachel has purchased tickets for a baseball game.