The most basic type of smart contract is a multi-signature smart contract. A multisig transaction states that a defined number of people (public keys) must sign a transaction with their private keys before it’s considered valid. Bitcoin was the first blockchain to introduce multisig transactions in 2012.
The next iteration saw the creation of protocol smart contracts—blockchains with a few core programmatic instructions (called opcodes) built-in. Protocol smart contracts are blockchains that operate as a single application with the ability to execute a few opcodes. However, protocol smart contracts are difficult to scale because each change to the smart contract (protocol) requires a hard fork—a radical change that mandates the creation of a new blockchain and for each node to upgrade their software.
Ethereum revolutionized smart contracts in 2015 by launching scriptable smart contracts, turning the blockchain into a “world computer” that runs many different applications at the same time. Developers manage their own set of smart contracts and can change them at any time without the need for a hard fork. The scripting language abstracts low-level development complexity, enabling developers to build smart contracts in a matter of days and weeks as opposed to months and years.
The current evolution is scriptable smart contracts that connect with real-world data and systems existing outside the blockchain (off-chain). Connected smart contracts use secure middleware known as an oracle to trigger the smart contract’s execution using off-chain data. Oracles can also allow the smart contract to send data to other systems, such as settling the smart contract off-chain by sending payment instructions to a traditional fiat payment system.
More detail: https://blog.chain.link/what-is-a-smart-contract-and-why-it-is-a-superior-form-of-digital-agreement/