It's pretty analogous, particularly with other colloquial uses of "contract" like "contract of an API" and "design by contract". A smart contract is simply a g

It's pretty analogous, particularly with other colloquial uses of "contract" like "contract of an API" and "design by contract". A smart contract is simply a guarantee that "if you do this, the outcome on the blockchain will be that", where "this" is defined by the method signature and "that" is defined by the smart contract's code. A contract between two people is fundamentally an agreement that "If you do this, then I will do that", enforceable by law. It exists to allow trust: if you have no way of knowing what the other person is going to do in response, why would you ever do something like give them money or perform services for them? With smart contracts the legal system is replaced by a worldwide network of computers, and the actions that you can guarantee are restricted to quantities or properties represented on the blockchain. But the basic motivation and principal are the same: you want to provide guarantees about the future so that people can take mutually beneficial actions with them in mind.