What are "smart contracts" and how are they used in AI?

Smart contracts are a type of digital agreement that automatically execute actions when predetermined conditions are met, all based on encoded terms. They involve programming logic that allows the contract to self-execute without needing intermediaries, thus streamlining processes. The integration of AI enhances these contracts further by enabling them to adapt and learn from data. This can include predicting outcomes, optimizing contract terms in real-time, and ensuring compliance with regulations. The ability to operate autonomously and evolve with context makes them particularly powerful in applications such as finance, supply chain, and legal affairs, where reducing human intervention can lead to greater efficiency and reliability.

In contrast, the other options describe varying degrees of manual intervention or oversight that are not characteristics of smart contracts. Manual contracts enhanced by AI insights imply a reliance on human interpretation and modifications, while requiring human approval at every stage contradicts the essence of what makes smart contracts "smart." Similarly, the notion that smart contracts must be verified by legal entities before execution suggests a dependency on traditional legal processes, which undermines the automated nature that defines smart contracts.