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easyBlockchain Developer interview question

What is a smart contract, and what are its main limitations?

What the interviewer wants to hear

  • Program deployed on a blockchain that runs deterministically
  • Holds state and funds and executes when called by transactions
  • Code is public and usually immutable
  • Cannot access off-chain data directly; needs oracles
  • Every operation costs gas; storage is expensive

Model answer

A smart contract is a program deployed to a blockchain at its own address. It stores state, like token balances, and can hold funds. It runs only when someone sends a transaction or another contract calls it, and every node executes it and must get the same result, so it is deterministic. Its main strength is that the rules are public and enforced by the network, so no one can secretly change them. The limitations come from the same design. Code is usually immutable, so bugs are hard to fix unless you planned an upgrade path. Every operation costs gas, and storing data on chain is expensive. Contracts cannot call web APIs or know real-world facts like a stock price; they need oracles. They cannot run on a timer by themselves either; someone must trigger them. And because code is public, attackers can study it.

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