Nick Szabo  🔑

That said, if your dApp/persistent script doesn't control assets or, short of invoking traditional law, incentivize performance, it's not a smart contract and you should call it something else.

Worrying about whether a smart contract is "legally enforceable" reflects a profound misunderstanding. The main relation of smart Ks to traditional courts is that smart Ks control burden of lawsuit. If "possession is 90% of the law", then a good smart K may be "99% of the law".

It shows a profound misunderstanding of what? Also not clear how Rothbardian property law/theory analogies to “9/10ths” presumptions in property disputes are apposite here? Please explain/clarify.

I think his meaning is quite clear: Since smart contracts automatically execute, the liability of legal non-enforceability is overbalanced by their inherent avoidance the legal system to as high a degree as possible.

Indeed, there are many contexts e.g. cross-border financial deals between individuals, in which the costs of legal recourse are usually prohibitive -- the burden of lawsuit outweighs the ex ante (and often even ex-post) benefit of its use to incentivize performance.

Third, how does “smart contract” lower the “cost of enforcement” exactly? Thus far, the conceptual engine that’s doing this sounds like the following: “Smart Ks hyper-incentivize bilateral performance, so that, statistically, non-performance is reduced to *just* 1% of the time!”

It lowers the cost of enforcement because the assets flow based on the code--thus, going to court is less likely to be necessary for the party that ends up with asset possession. As Nick mentioned, cross-border deals (+ very low $ value deals) are one area where this could help.