The transaction protocol works with algorithms following an ‘if-then’ logic.
When we talk about smart contracts now, we refer to a computer protocol run on a decentralised blockchain system, usually the Ethereum blockchain, which allows automated (i.e., self-executing) contract execution between two or more parties with previously coded data. As with all data on a blockchain, the distinct features and current legal limitations of smart contracts are theoretical immutability, perpetuity,
decentralisation and encryption.