Smart contracts are a digital version of traditional contracts that can help you to exchange money or anything of value in a transparent way without the need for a middleman. Smart contracts define the rules and penalties around an agreement and automatically enforce those obligations in the same way that a traditional contract does.
Here is a good article that explains what a smart contract is in layman's terms.
The Metal smart contract manages the balances of the coins and allows users to exchange fluidly on the Ethereum blockchain with ERC20 compatible services.
Smart contracts can:
- Function as 'multi-signature' accounts, so that funds are spent only when a required percentage of people agree
- Manage agreements between users, say, if one buys insurance from the other
- Provide utility to other contracts (similar to how a software library works)
- Store information about an application, such as domain registration information or membership records.