In a new post to his blog, Chris Hartjes, spurred on by an article in the latest edition of php|architect magazine (covering protecting your code), has shared a few opinions starting with a certain paragraph near the end.
To start, I will focus on the paragraph above. What I get out of that is that if only your source was closed and hidden from prying eyes, it would not have bugs in it. Which is, of course, total nonsense. Code has bugs because it's open and they feel safer? There are two kinds of bugs: application bugs (which is the code I would write) and system bugs (in this case, bugs that that appear from PHP itself). I'm sorry, but there is nothing I can do if there is a bug in PHP that causes my application to crash except to point this bug out to the people who have the ability to fix it.
He goes on to talk more about how protection like this (the article talks about using the IonCube Encoder) will not stop someone if they're really determine to get at the code underneath the encryption. His only suggestion is to make an application good enough that people wouldn't want to try to steal it as much and would rather pay for their version.
Encode your stuff if you want, but be aware that the minute you choose to do that you are telling your customers "I don't trust you" and I have a hard time understanding a business model that assumes people are going to want to steal the stuff you sell.