I've been "around" bitcoin for several years now and one thing has always puzzled me. One of the things I tell people new to BTC on why it is so great is when I describe the purchase/sale of a car, and how that contract goes on a ledger that cannot ever be changed.

I give this example, but I have no idea how this would actually work. Can someone describe the process to me? In order for it to be legal, all the documents would have to be signed and sent to the state (I live in TX) to properly transfer ownership.

Would I scan all those documents into 1 PDF and somehow "attach" them to the block containing the transfer of 5 BTC to my address (assuming I'm selling the car)?

If I had to go to court to prove that I sold/bought said car/property to/from person X, how would the blockchain be useful to me in proving my case?