Smart Contracts

Smart contracts are self-executing codified business logic a regulatory policies that resides within the Blockchain. They execute when predefined conditions within the system are met. They allow allow the ledger state to be modified. They can facilitate the exchange and transfer of anything of value (e.g. shares, money, content, property).

Eg: A letter of credit that facilitates payment between unknown buyers and sellers can be made into a smart contract.

A popular high level language for writing a smart contract is Solidity.

A web version of Solidity can be used here: https://remix.ethereum.org/#optimize=false

Here is a visual representation of a smart contract (escrow account contarct) that will help you relate.