Quiz: Smart Contracts 3 questions · 80% to pass 1. A smart contract is best described as:A legal contract signed electronicallySelf-executing code on a blockchain that automatically enforces agreed-upon terms when conditions are metAn AI that writes contractsA digital signature on a PDFSmart contracts are programs stored on a blockchain that execute automatically when predefined conditions are satisfied. They remove the need for intermediaries to enforce agreements because the code itself is the enforcement mechanism.2. 'Trustless' in the context of smart contracts means:The system cannot be trustedParties do not need to trust each other because the code enforces the agreement deterministicallyThere is no securityOnly the government can verify transactionsTrustless does not mean untrustworthy. It means trust is unnecessary because execution is guaranteed by code. Two strangers can transact because the smart contract will only release funds when both sides fulfill their obligations, verified by the network.3. A key risk of smart contracts is:They execute too slowlyBugs in the code are also immutable, meaning flawed logic executes exactly as written with no recourseThey require a lawyer to deployThey only work on BitcoinBecause smart contracts execute deterministically and are often immutable once deployed, a bug means the flawed code runs exactly as written. Hundreds of millions of dollars have been lost to smart contract exploits (e.g., The DAO hack in 2016). Auditing before deployment is critical. Check answers Retake quiz Back to lesson Next lesson →