Explain smart contracts with practical examples and their real-world applications.

Smart contracts are self-executing programs on blockchain that automatically enforce agreements when conditions are met, eliminating need for intermediaries.\n\n**Key Characteristics:**\n• **Autonomous execution** - Runs automatically when conditions are met\n• **Immutable** - Cannot be changed once deployed\n• **Transparent** - Code is visible on blockchain\n• **Trustless** - No need to trust counterparties\n• **Cost-effective** - Eliminates intermediary fees\n\n**How Smart Contracts Work:**\n1. Contract code is deployed to blockchain\n2. Conditions are programmed using if-then logic\n3. When conditions are met, contract executes automatically\n4. Results are recorded on blockchain\n\n**Simple Example - Escrow Contract:**\nIF buyer_confirms_delivery AND seller_provides_tracking\nTHEN release_payment_to_seller\nELSE IF 30_days_passed AND no_confirmation\nTHEN refund_buyer\n\n**Insurance Example:**\nIF flight_delay > 2_hours\nTHEN pay_compensation(passenger_wallet, $200)\n\n**Real-World Applications:**\n\n**1. DeFi Protocols:**\n• **Automated lending** - Borrow against collateral without banks\n• **Decentralized exchanges** - Trade tokens without intermediaries\n• **Yield farming** - Earn rewards for providing liquidity\n\n**2. Supply Chain:**\n• **Automatic payments** - Release funds upon delivery confirmation\n• **Quality tracking** - Record temperature, location, handling\n• **Authenticity verification** - Prevent counterfeit goods\n\n**3. Real Estate:**\n• **Property transfers** - Automatic deed transfer upon payment\n• **Rental agreements** - Automated rent collection and deposits\n• **Fractional ownership** - Split property into tradeable tokens\n\n**4. Gaming:**\n• **In-game assets** - True ownership of items and characters\n• **Play-to-earn** - Automatic reward distribution\n• **Tournament prizes** - Instant payouts to winners\n\n**Limitations:**\n\n**1. Oracle Problem:**\n- Smart contracts cannot access external data\n- Need trusted data feeds (Chainlink, Band Protocol)\n- Risk of oracle manipulation\n\n**2. Immutability Issues:**\n- Code bugs cannot be easily fixed\n- Need extensive testing and audits\n- Example: DAO hack (2016) - $60M stolen\n\n**3. Gas Costs:**\n- Complex operations are expensive\n- Network congestion increases fees\n- Limits practical applications\n\n**4. Legal Recognition:**\n- Unclear legal status in many jurisdictions\n- Dispute resolution challenges\n- Regulatory compliance issues\n\n**Platforms:** Ethereum (most popular), Binance Smart Chain, Cardano, Solana, Polygon\n\n**Benefits:** Reduced costs, faster execution, eliminated human error, global accessibility, 24/7 operation