Smart contracts are computer programs which allow for the automatic transfer of digital assets between parties based upon pre-specified conditions. Smart contracts have been used primarily in association with cryptocurrencies..

Traditionally, we are used to applications which are hosted by a centralized organization. While the code of the application may be distributed across multiple physical servers, they are controlled by a single entity. For example, Facebook is a centralized app which is controlled by an entity called Facebook Inc. Decentralised apps, on the other hand, are not controlled by a central entity but are governed by code and the protocols set within them. These codes are generally open sourced and anybody can use them to create a new App of their own. Some Ethereum-based Apps that have been successful are Golem, Augur, and Melonport. These Apps have been able to achieve millions in market cap.