Blockchain Developer Certification Practice 2025 - Free Blockchain Developer Practice Questions and Study Guide

The primary function of a smart contract is to automate and enforce contract agreements without intermediaries. Smart contracts are self-executing contracts with the terms of the agreement directly written into code. They operate on blockchain technology, which allows for decentralized execution. Once the conditions coded into the smart contract are met, the contract executes automatically, ensuring that all parties adhere to the agreed-upon terms without the need for a central authority or intermediary. This not only enhances efficiency and reduces the potential for disputes but also improves transparency, as all actions taken by the smart contract are recorded on the blockchain.

Other options do not align with the core functionality of smart contracts. While maintaining a decentralized ledger is a fundamental characteristic of blockchain technology, it does not specifically pertain to the functionality of smart contracts themselves. Traditional banking services, on the other hand, entail intermediaries, which smart contracts aim to eliminate. Lastly, the physical storage of cryptocurrency does not relate to the operational purpose of smart contracts either, as their role is strictly tied to automating and enforcing agreements rather than influencing storage mechanisms.