While presenting at the 27th Communication Congress in Berlin, a group of hackers called fail0verflow made a breakthrough that stunned the PS3 hacking community: They managed to bypass the console's major security barriers. The group was able to gain the same access Sony has in deciding what software to allow by gaining access to encryption keys. The keys were shown in the demonstration and are now available for the public.
This exploit allows people to sign into any program giving the user the same ability to allow software as Sony. Unauthorized applications, custom firmware, pirated games and burned Blu-rays can now be played using the keys.
Until now the PS3 was fairly resistant to hacking attempts due to its use of a tightly guarded encryption system that makes sure only games and software approved by Sony can run. The only way for Sony to address this issue would be to release a new PlayStation 3 with a new way of encrypting data.
According to Wired, this hack makes the PS3 the most vulnerable console, "even more open to exploitation than the Xbox 360 and Wii, which were opened up to piracy and hacking long before Sony’s box."
Source: Sony Insider