Citing piracy concerns, Sony has tried to block users from installing an alternative Linux operating system on their PS3 consoles, but in the process they might have actually made things worse. Thousands of homebrew users were energized by Sony’s move, seeing it as an encroachment on their legitimate rights. One hacker by the name of GeoHot has stepped up to the plate and found a way to update to a custom firmware version 3.21 without losing the Linux feature. Users will void they warranty by doing so, but they will still be able to log on and play PSN games using a proxy hack.

While GeoHot’s workaround does restore the ability to install Linux on the PS3, it also exposes new vulnerabilities in the firmware that could eventually lead to illicit uses such as piracy.

In a worst case scenario, this could lead to a situation reminiscent of Sony’s problems with the PSP, a device that has reportedly suffered due to piracy. The very mention of ‘custom firmware’ on the PS3 is probably sending chills down the spine of Sony executives.

The hacker, whose real name is George Hotz, is unrepentant for his work, claiming that Sony has alienated the very community of hackers that embraced the PS3 because of the Linux feature.

“Note to the people who removed OtherOS, you are potentially turning 100000+ legit users into “hackers.” There was a huge(20x) traffic spike to this blog after the announcement of 3.21. If I had ads on this site I guess I’d be thanking you”. He wrote on his blog.

It’s really one step forward, two steps backward from Sony’s perspective. Hotz has said that he might even be able to enable the Other OS feature on newer PS3 slim models, which never had the option to begin with.