“Smart” contracts are contracts written as software, rather than written as legal text. Because you can encode them directly on the blockchain, they can involve the transfer of value based directly on the cryptographic consent of the parties involved — in other words, they are “self-executing.” And in theory, contracts written in software are cheaper to interpret — because their operation is literally mathematical and automatic, there are no two ways to interpret them, which means there’s no need for expensive legal battles.