You are, of course correct on a broader point, that if the software is in your hands and on your computer, it is possible to crack it, granted, it is far easier to just bypass the security block altogether.
My point is a general one, without adding any online verification ( for example through steam user ), it is can never be called "safe" or "secure".
Any hash or password encryption Paradox could put in would be possible to crack or bypass in 1min by anyone with a bit deeper knowledge and the crack could be shared to anyone that wants it. All the information needed is and must be in the game, and all the password HASH must be stored in the savegame which is also available.
If you call it password in clear text or HASH is only semantics, the principle is the same and you don't need to crack any encryption to bypass it when you have the key ( the game ) and the passwords in the savegame.
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