> You can still always fall back to the government if disagreements occur.
Does the government have an override mechanism on the blockchain? If yes then what was the point of blockchain. If no, then will the government fork the blockchain?
Does the government just put someone in prison until they give up the keys? Most countries don't have true "life in prison", and what are the implications for the wrongly convicted in the ones that do?
How would you invalidate an illegal smart contract where one party is the estate of someone who died, are in a coma, or gets put under conservatorship?
> The advantage of smart contracts is they automate away the need for costly lawyers in the good case (which is most of the time). You don't need to pay so much overhead for "protection".
Most of lawyer work is clarifying intent, and legal compliance. Smart contracts try to replace the former with coders, but without a common sense safety net. And without the knowledge about what contracts are even legal. As for compliance, that's still needed.
E.g. writing a smart contract to pay someone automatically needs to support garnishing a salary due to various court actions.
What lawyer work exactly becomes automated? Do you know lawyers, and what they spend time on? Every example of smart contracts seem to me to be incredibly arrogant, and even more ignorant about what lawyers do.
It has a smell of "I don't know what they do, which means it can't be hard. I can write a twitter clone in a weekend, so surely I can write a script to replace a lawyer".
You can write a "bucket shop" web app over a weekend, but you need a lawyer to tell you it's illegal, or under which circumstances it's illegal. That's the real "protection".
I mentioned FTX and Tether to point out that the industry is built on a house of cards. E.g. if Tether implodes then that affects your BTC. I'd say it's more likely that Tether implodes than that the US government implodes.