This really underscores the motivation behind undoing TheDAO: the Ethereum community doesn't want to admit that smart contracts (transaction machines) have much more limited scope of usefulness that was envisioned, so they are between a rock and a hard place. They have to either
(a) double down on their position that transaction machines have broad utility by turning them into Care Bear contracts sometimes arbitrated by a community court of miners/stakers - a radical redesign that should take a year or more to implement and doesn't seem very promising - or
(b) abandon their position that transaction machines have broad utility and accept a much lower market cap commensurate with such a limited system.
These type of smart contracts are more limited in scope then some people have envisioned, this is true. However, I do not think that means it should have a lower market cap, most cryptocurrencies have far greater potential speculative value compared to their present evaluations.
I also think you are underestimating how much more difficult these type of arbitrations by the miners/stakers will become as time passes. In the future it will become far more difficult for such an action to be taken and for “consensus” to be found.
Fortunately for Bitcoin, there is no real competition, and it seems to me that a PoW fork as a last resort can erase every last BS machination. BS's $76 million can buy a lot of tendrils, but we are already seeing them have to play catchup to other teams such as BU. Ethereum's downfall took some pressure off as it's now clear there is no substantial competition from altcoins at this time.
I think that you are wrong in thinking that Bitcoin has no competition, even a clone of Bitcoin with an increase blocksize is competitive to Bitcoin, just not competitive to the alternative cryptocurrencies, which is why most of the successful alternatives have very innovative and different designs when compared to Bitcoin.
That was a great post by the way, the post from which I took this last quote. I did agree with the majority of its content.
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