OK - I've read the paper on arXiv - can see that ethereum (for better or worse) has smart contracts layered on top where as bitcoin does.

I seem to recall that there was another more fundamental difference at the blockchain level, was wondering whether there was any link for that ...?

re: blockchain differences: I hear that Ethereum is planning to move to proof-of-stake, rather that proof-of-work, but I don't have an opinion on that. There may be other salient differences I'm unaware of.

It's the 'smart contracts' that I think are foolish.

Replacing the legal system with code only makes sense if all of the following obtain:

(a) the code is 100% bug-free (b/c accidents cannot be rewound)

(b) all code-writers are 100% honest (their code does what they say)

(c) all contract participants are 100% perfet code readers (so as to not enter into fraudulent contracts)

(Strictly speaking, only one of (b) and (c) needs to be true).

None of these conditions will ever obtain.

And even then you haven't really replaced the legal system if you are dealing with any goods that exist outside of the blockchain, since no matter what the "smart contract" code does, those ultimately need to be transferred outside the smart contract system and subject to the legal system.

(And, actually, even transactions entirely within the blockchain may trigger legal consequences, so even for them you've merely supplemented, rather than replaced, the legal system.)

Thank you for your detailed & useful clarification.