As we know from our daily lives, software programs can do many things. But codes in a blockchain have some limitations, as we’ll explain later.

Still, let’s see the two main things that the smart contracts can do when executed:

1️⃣ Generating new transactions to be added to new blocks. A smart contract can create new transactions. These transactions should then be added to the blockchain by miners.

2️⃣ Updating the state of the blockchain. A smart contract can update the state of the blockchain by modifying the data stored on the blockchain. That might mean updating a balance or changing the ownership of an asset.

🤫 Note: We'll explain what else smart contracts can do in later modules.