What Are the Key Differences between a Smart Contract and a Traditional Financial Contract?

The primary difference lies in execution and enforcement. Traditional financial contracts are written in legal language and enforced by the legal system, requiring intermediaries like lawyers and courts for dispute resolution.

Smart contracts are written in computer code, stored on a blockchain, and self-execute automatically when predefined conditions are met, minimizing the need for intermediaries. This makes smart contract execution faster and often cheaper, but also more rigid, as traditional contracts can incorporate ambiguous terms like "best efforts" which code cannot easily interpret.