Smart contract
A smart contract is a term first coined by Nick Szabo in 1997 that describes a digital version of a contract stored in a blockchain. Because Smart contracts are created on the blockchain, they are immutable, meaning that once the contract is created, it cannot be modified. If someone attempted to modify the contract, it would be noticed because it's distributed among multiple people on the blockchain.
Smart contracts are created by programming rules (if/when...then) that govern transactions on a blockchain like Ethereum. For example, a smart contract could be created to fund a project. Those funding the project would agree to pay their desired amount, and once fully funded, the smart contract could hold some or all funds until the project is completed. When the set goal is met, the smart contract releases the funds to the developer.
Unlike a traditional contract where a third-party needs to be involved to create, maintain, and verify the contract. The smart contract only needs a third-party to help create the contract; once created, the smart contract can handle and automate everything else.