And using the disc to authenticate removes the benefits of not needing a disc. Things like instantly switching between games, storing games in the cloud, ect.

No it doesn't
You can't be this hardheaded...a simple check for the disc in the drive and then playing it off the hard drive is not removing the benefits of not needing a disc
Because you do have the ability to install a PS4 game to the harddrive to play, what's stopping me from copping and giving me friends all a copy of the same game to install to their PS4s. HAVING THE DISC IN THE DRIVE TO PLAY! Again, no offline required, but you can still play it.
how can you instantly switch games if you need a different disc for each one?
