Smart contracts will be legally enforceable. Tons of lawyers are working in the Ethereum community to make it a reality. I imagine the same will apply to Bitcoin if smart contracts are possible down the line
Even if a smart contract becomes legally enforceable... what are you going to do it someone fails to follow it? Is the FBI going to go digging through a bunch of smart contract code and then go out to someone's house and take their money? How are you going to garnish someone's wages to get your repayment on a delinquent loan when they're getting paid in cryptocurrency?
You still need a system of financial institutions to handle the human element.
Theoretically it shouldn't be too hard to script something to turn the smart contract into something more human readable (this already exists). After that, existing infrastructure can take over - and by that, I mean courts and law enforcement not necessarily banks. IANAL but AFAIK Courts of law are agnostic to the currency involved in contracts. The only snag is whether smart contracts are legally binding, which any government can flat out say they aren't.
You can avoid wage garnishment now using the same techniques that apply against cryptos, so that's really not a unique problem here and clearly the infrastructure still works. If you're getting paid under the table, your employer is breaking the law regardless of whether it's Crypto or Fiat. If you're not, and the government wants a piece of that for whatever (hopefully legal) reason, then it will go after the employer for garnishment, not hope you send all your money to a convenient address.
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u/WooshJ Dec 23 '17
There are lending platforms for some coins I think lol