How can the blockchain survive without an army or other kind of law enforcement? I'm sold on most of the Bitcoin aspects. I believe that the blockchain has incredible potential value and how the fact that it's decentralized removes a lot of the corruption and cronyism that are rampant in today's centralized institutions.
However one thing I don't get is how does the contract, or property or other value that you have stored in the blockchain is enforced? Surely some people won't care that the proof of property of your land is in the blockchain and just claim it with guns. What do you do then? How is this sorted? States have judicial and military power. What does the blockchain have?
The blockchain itself does not have any power. It is just public set of records, like a phonebook. 

Depending on the contract between trading parties, you arbitrage the contract disputes within the legal means you have available. 

However, blockchain can act as a proof of agreement and everything signed there is very hard to forge: the other party cannot claim they did not sign the agreement if the private key used in signing can be proven to belong to the party.