Smart Contracts and the World Computer
Code that executes automatically when conditions are met. The mechanics, the standards, the major exploits, and the protocols built on top.
11 min · advanced · part of Smart Contracts: Programmable Money
What you'll learn
- Contracts Without Lawyers
- Ethereum: The Programmable Blockchain
- ERC Standards: How Tokens Work
- When Smart Contracts Go Wrong: Major Exploits
- For Deeper Reading
Key terms
- Smart contract
- Self-executing code stored on a blockchain that automatically enforces the terms of an agreement. Once deployed, runs exactly as written.
- Ethereum
- The blockchain platform pioneered by Vitalik Buterin et al. Launched July 30, 2015. The dominant smart contract platform.
- Solidity
- The most widely-used programming language for Ethereum smart contracts. Designed by Gavin Wood et al. Current version 0.8.35 (May 2026).
- EVM (Ethereum Virtual Machine)
- The stack-based runtime environment for Ethereum smart contracts. Specified in the Yellow Paper. Each opcode has a defined gas cost.
- Gas
- The unit of computational cost on Ethereum. Each operation has a fixed gas cost; transactions specify gas limit and gas price.
- ERC-20
- The fungible token standard for Ethereum (EIP-20, Nov 2015). Powers stablecoins, governance tokens, and the vast majority of fungible tokens.
- ERC-721
- The non-fungible token (NFT) standard for Ethereum, finalized June 2018. Powers digital collectibles, art, gaming items, ENS domains.
- ERC-1155
- Multi-token standard (Witek Radomski/Enjin, June 2019). Allows fungible and non-fungible tokens in a single contract.
- DeFi
- Decentralized Finance — financial services built on blockchain without traditional intermediaries. Total DeFi TVL ~$160B as of mid-2026.
- DAO
- Decentralized Autonomous Organization — an organization governed by smart contracts and token-holder voting. Module 14 covers in depth.
- Reentrancy
- A class of smart contract vulnerability where an external call enables recursive callback before state updates. The DAO hack of 2016 exploited this.
- Flash loan
- A DeFi pattern where a user borrows a large sum with no collateral, conditional on repayment within the same transaction. Enables creative arbitrage but also enables exploits.
- Audit firm
- A specialized security review firm. OpenZeppelin, CertiK, Trail of Bits are leaders. Audits typically cost $25K-$250K per engagement.
- Chainlink CCIP
- Chainlink's Cross-Chain Interoperability Protocol. As of late 2025, secures $14T+ in onchain transaction value across 60+ networks.
Read the full lesson in the CryptoBipto app.
Open lessonEducational only — not financial advice.