The non-hardware version of this would be to have the ISV implement something similar to expando-protection. Basically, I'd create a single file which contains the 'compressed' version of the application, of which I'd generate the checksum in a different section. I'd then embed this checksum in the application, the data, anything. Then, when the application is run, the checksum is checked and if it doesn't match, the installation isn't installed. There's nothing to crack.
Because if this scheme is implemented, of course you can and will find cracks. But if done right, this scheme would be very difficult to implement. For example, you can't just grab every data file which is checked by the checksum, you need to grab every data file which is checked by the checksum AND which is bigger than the size of the checksum. And this system wouldn't require a dongle, it's much more like a file-based protection scheme.
You could even use the online connection to crack it, to make it easier to crack the copy-protection for each of the users. This could work for a single-player game, but not for a multi-user game.
It is possible to implement copy protection in a way that wouldn't allow the user to crack it, but force him to be online (as in, use a real internet connection) and just do that for the copy-protection. Then the user can play the game as many times as he wants, but won't be able to use the game on other systems/machines, and hence would be more likely to buy the game again.
I wouldn't like to see those who don't code to get a clue on how to protect the code they write. The main advantage of doing so is that you must have that much more security that the people who know how to crack your code.
Some applications, such as Java, require that the application directories and libraries are updated to a newer version before the user can update. However, there are some applications that are not explicitly API-specific, such as the X Window System, the X server source code, are automatically updated as required.
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