If the world were magically to switch to Open Source Everything, assuming
physical security, is there an argument that this is somehow insecure --
that some code needs to be secret in order for it to be secure?  Chip fabs,
hardware designs, missiles, attack systems, radar, networks, nuclear and
energy systems etc.

Or, with proper encryption and key-based systems implemented does the
openness of the system not imply weakness, beyond unknown vulnerabilities?
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