I think the question is: Why then deal with all those inefficiencies and cost of distributed computation, mining, and broadcast transactions, if you need courts to override decisions anyway, and insurance to cover yourself when something goes wrong? You can already "automate" without smart contracts.

I share the general skepticism, but I am open to the idea that (much like other electronic commerce), the smart contracts might make 99% of transactions much more efficient; so the expensive manual interventions are only used on a small proportion.

Of course, it is not necessarily obvious that blockchain-powered smart contracts are the only way — or the best way — to achieve that automation and efficiency!

> the smart contracts might make 99% of transactions much more efficient

The entire point of proof-of-work is that it is inefficient, by design. Efficiency is counteracted: Advances in technology that lead to more efficient mining techniques directly mean the difficulty for the next block being adjusted up.

Operating on traditional databases (where automation is regularly implemented, too) is orders of magnitude more efficient. Because like most other things other than proof-of-work, those processes directly benefit from getting more efficient.

PoW wasn't designed to be more efficient, the Nakamoto consensus type implementation exists to improve honesty and security. There is no traditional database that's as secure as a blockchain, it's always a tradeoff between security/immutability and efficiency. But since efficiency does matter many 2nd generation chains have moved away from PoW.

I think the way to look at is that, smart contracts are not behind the contracts/agreements, smart contracts are the contracts/agreements. Once you realize that, if a smart contract executed successfully then the operation was legitimate.

Of course, ethereum forked when a big hack happened, but it won't be forking for every hack, otherwise it's not really a reliable blockchain.

A smart contract can't actually be the contract (and may end up not even vaguely correspond to the resulting situation in the real world) because the legal system alters or voids contracts all the time. A judge who decides that your smart contract has an unconscionable clause isn't going to care about what you say about immutable code - he's going to tell you to fix it in the real world or else.

Judging from the amount of contract disputes in the court system, I would expect it to be forked pretty regularly

So what's the difference between "hacking" and "following the contract"? The whole point of a smart contract is that the code is the contract.

Except it can't be, because the legal system can and regularly does adjust or override the terms of contracts for a variety of reasons.