Bear in mind some knives are designed for slicing vegetables and some knives are designed for stabbing humans, and whenever you design a tool, you are making a certain action easier to accomplish.

I think the analog to that would be that some smart contracts can be designed to do benign things like trade cats and some can be designed to do malicious things, like assassinate someone for money.

Smart contract are effects that automatically happen to accounts using tokens that aspire to be currency.

So the scenario - a person works for etherium tokens (or whatever equilivalent), a person has certain number of tokens accumulated as their savings. A person violates whatever smart contract they have agreed to and they're automatically penalized, with courts or anyone else being unable to undo this - even if the contract was for, say, illegal activity. If the entire economy of any area runs on whatever crypto tokens, a person could have no choice but to agree to one of these contracts.

It's fairly unlikely to happen, admittedly, but the point is the entire exercise is a blue print for a Libertarian Party Utopia/Dystopia, depending on one's interpretation of the situation. My interpretation is extreme dystopia.

How are the courts unable to undo a smart contract? Just like with cash, a victim of fraud can still win in court versus the perpetrator, and the court can order restitution and if that's not possible, garnishment.

Just because something is digitally irreversible doesn't mean it can't be undone the traditional way.