Bitcoin showed the possibility of an open-source financial rail, relying on interchangeable service providers to join or leave at will. A key question is whether the permissionless consensus technology that underpins this permissionless design can also meet the security standards required for mainstream financial applications. We develop a model that integrates economic and distributed-systems constraints, define the objectives of free entry and security, and examine their joint attainability. We demonstrate the feasibility of an open and secure protocol by presenting a protocol that attains an economically meaningful notion of security while preserving Bitcoin’s permissionless design. Our protocol’s security does not require costly miner rewards or high energy consumption. The analysis formalizes the essential role of the user community in sustaining secure and efficient open financial rails.
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