First coined by computer scientist and “Bit Gold” inventor Nick Szabo in 1994. At the time, Szabo described smart contracts as transaction protocols executing the terms of a contract. Today, they mean programs on a blockchain that run when certain conditions are met (more or less the same idea with different nomenclature).
Smart Contract features include blockchain code that:
1) Can do logical operations
2) Are state machines that use transactions to change state
3) State changes happen via transactions and mining (in 2021)
4) Are Turing Complete – meaning they can (theoretically) solve any problem in code.
Example: DAOs and other Web3 projects (most exist on the Ethereum blockchain) use smart contracts to automate the execution of an agreement so that all participants can be certain of the outcome, without third party involvement. Smart contract programming languages include Solidity, Vyper, LLL, Serpent, and Mutan.