In other words, standard contracts work just fine (without any lawyers involved) when everything goes to plan. It's the failure cases that matter, and it's not hard to imagine a compromised lock (or an entire company's locks if they're connected to the internet for access to the blockchain) that no longer respect the smart contract. So you're back to calling your lawyer to help sort out the mess.
If you use a smart contract you don't need to maintain any sort of backend at all. Your infrastructure costs are basically zero because they're baked into the cost of using the contract, which is paid on every transaction. You also get interoperability for free without having to build out any sort of API layer.
Smart contracts are not the solution to all problems but I think they have some really interesting use cases.
The part they say quietly is that the ledger supersedes the law and legal framework, and that’s clearly not how governments and their legal frameworks work.
I have heard several stories by now of renters being defrauded by fake landlords. A smart contract could actually help. Decentralized would mean everybody can check who owns a property, not just the owner of some obscure property database.
Isn't there a public ledger of property ownership? In any case, there could be.
In my country, merely transferring property rights costs a lot of money. I know a friend paid 20k just for officials to make the entry in their book.
Blockchain could easily replace that.
Or the "property officials" could have a key and people could verify with the smart contract that some transfer has been signed by the right key.
I would guess that hiring a contract developer to create a water-tight contract the computer is capable of understanding would be much more expensive than a lawyer.
This is in a similar vein to the fact that it's more expensive to have programmers create a perfect NLP app to translate something than it is to just hire a translator. Translating english into other languages is not a solved problem. Whether that other language is french or a smart contract does'nt seem that material.
It does seem like it will be much cheaper to make contracts in bitcoin that don't require translating thousand-line-english-documents into a smart contract.
However, you can already do that without a lawyer. If me and you sign a paper saying it's a contract that "I will pay you $200 for an item delivered on date X/Y, and if you're late I pay $20 less per day it's late", that's already legal and enforceable without a lawyer.
Coding that same thing in bitcoin would be harder than writing it on a paper still I think.
Smart-contracts are computers trying to be human. Most contracts are flawed and only really matter when things go wrong. I'd rather that a human be there when things go wrong to understand the human intent behind the contract than have a computer which does not know the human intent, but is able to enforce the (likely flawed) computational representation of that intent.
Of course not, and when they screw up, we lean on a robust (yet imperfect) legal system to intervene.
One of the advertised features of smart contracts is a reduced dependency on trust, so if they don't actually have that advantage (at least in relation to real-life interactions), then it's hard to say they're any better than traditional legal contracts for those use cases.
Your understanding of smart contracts is correct - whenever smart contracts deal with stuff in the physical world you need to have an oracle.
In my experience over past half decade, there's been a lot of misleading information spread by people about smart contracts with schemes like claim to be a good use for smart contracts that suffer from oracle problems. A lot of this has come from naive people that just didn't other stand, but some has been spread by people looking to make others part with their money.
The way I think about smart contracts, is that if you need to trust someone in the real-world, by default you probably don't want or need a smart contract.
That said, there are a subset of such instances where smart contracts that depend on trust in real world entities have proven to be very useful. Wrapped tokens and stablecoins are an example of this - Tether being the most famous.
They are just now disclosing their finances to the feds, you might want to change your sales pitch...
I can see how smart contracts might be useful in contracts that involve other assets that are directly connected in the same decentralized context (i.e., other bitcoin transactions or blockchain entities).
However, for anything else in the real world, they always (from what I've seen) require an "oracle" of some kind. True, that can be based on a consensus algorithm involving multiple parties in the real world, but it always ends up requiring trust that those real-world entities are playing by the rules. If we're relying on the good faith of real-world entities, how is a smart contract any better than a legal contract (a human would have to step in as the arbiter in either case)?