But if you allow the courts to dictate which crypto transactions are legal/illegal and to undo illegal ones, what's the point of all the decentralisation? You can just use the existing systems.

Which country's laws apply? What if one country considers the Ethereum contract binding, but the other doesn't?

It feels like having your cake and eating it too. I met lots of crypto bros, they all talk about how they use it so they can be immune to government censorship/intervention etc. They gloat about using crypto to avoid taxes and laws.

Relying on the same institutions that you are trying to get away from to overcome flaws in your framework seems entirely hypocritical to me.

And therein do you see the almost inevitable doom of the dream of decentralised cryptocurrency, because it’s never going to be able to stand up against the power of governments once they decide they don’t like it and have no vested interest in it surviving. All of this stuff, even up to Bitcoin, is only still around at the sufferance of governments that have not yet decided to clearly make it illegal. Most are currently preferring to regulate it (which does tend to undermine the principles of full decentralisation, as you rightly observe), but a few decide to cut it out like a gangrenous parasite that’s enjoying mixing metaphors too much, and others may at almost any time. Already cryptocurrencies flout things like copyright and privacy law, for they have made it fundamentally impossible to comply with various plausible court orders. And “we have designed it so that it is not possible for us to comply” does not impress courts.

And in your musings about which countries’ laws—therein also do you see the perennial mutterings of discontent at international policy, and globalisation shambling towards collapse. It may be averted. It may not.

Unfortunately they won't be able to do much about it, besides jail someone (who may in fact be unable to make the victims whole).

When the executives of cryptocurrency firms start getting jailed for contempt of court (when they fail to comply with a legitimate court order), the industry will collapse, which will take the value of cryptocurrency with it, which will return cryptocurrency to niche status, even if the governments in question don’t just decide to make it illegal.

This may not be the way things unfold, but it’s legally completely plausible.