 What are smart contracts? Don't be surprised, but smart contracts are not smart and are not necessarily contracts. So what are they then? Well, rather than smart, they are deterministic, as they are rule-based if A then B algorithms. If you meet certain conditions, for instance, if you insulate your house, then you receive a subsidy. In cyberspace world, this is also referred to as Code is Law, which basically means that rules are enforced by algorithmic code that is automatically executed. As a matter of fact, however, a smart contract does not need underlying blockchain technology, nor does it even have to be executed in a distributed manner. The notion of smart contract was coined by Nick Szabo back in the middle of the 90s when blockchain did not yet exist. Nevertheless, if one nowadays talks about smart contracts, it generally refers to blockchain-based smart contracts. Blockchain-based smart contract technology enables these if A then B rules to be automatically executed and collectively validated by a distributed network without the need of an intervention of a trusted intermediary. This enables a secure, automated, distributed execution of three types of actions which would otherwise require a trusted third party. First of all, registering facts, for instance, tracking information about the food supply chain from production to delivery. Secondly, enforcing rules, for instance, the automatic payment of fines or taxes. Thirdly, transferring value, or at least a representation thereof via a so-called token. In practice, a blockchain application usually deploys a combination of these actions. These possibilities enormously increase the potential of blockchain applications. With regard to transferring value, all assets that are registered on the blockchain, which is also called tokenization, can be received, blocked, and transferred by smart contract technology. Think, for instance, about the transfer of copyrights, domain names, diamonds, or houses. Moreover, there are so-called non-fungible tokens, representing unique, not interchangeable digital items such as art, audio, video, or other forms of creative work. Additionally, smart contracts also do not necessarily imply the conclusion or execution of legal contracts. They can also constitute, for example, unilateral legal acts such as a gift or will, unilateral decisions of administrative authorities such as granting subsidies, means of evidence, for instance, registered facts in a police file, the automatic execution of processes, for instance, an automatic delivery order of cans when the soda machine is almost empty. We already know that smart contracts are not smart but deterministic. Well, they are also deaf and blind, as a smart contract has no knowledge other than its own status. It cannot easily know the status of other smart contracts, nor does it have access to data from the real world or elsewhere on the internet. Nonetheless, a so-called oracle can provide information that exists outside of the network into the smart contract. For instance, oracles can be used for smart locks based on a fingerprint, or for the award of automatic compensation in case of flight delays. Data, such as the proof of ownership of a house, must in certain cases be provided by an entity that must be trusted, such as a notary, a judge, or an administrative authority. Despite the promise of blockchain that trust in intermediaries would no longer be necessary, trust is still needed. For example, one must trust that the software does not contain programming errors, bugs, or that the input provided by the oracle is correct. Incorrect or false input into the smart contract leads to unintended results. This is also referred to as crap in, crap out. In conclusion, blockchain-based smart contracts are if A then B algorithms that enable an automatic execution of three actions that would otherwise require a trusted third party. Registering facts, transferring value, and enforcing rules.