In December 2010, fail0verflow hacking group managed to extract the PlayStation 3 encryption keys, allowing them to sign homebrew and copied games as originals. This hack remained live until March 2011 when Sony released PS3 Firmware 3.60 which managed to plug that hole.
Now however, it seems that hackers have managed to put their hands on the final piece of the puzzle; the one that ensures that the system is compromised forever and that there is nothing Sony can do about it.
More precisely, the console’s LV0 encryption keys have been extracted and released to the public. The LV0 is the loader that verifies and loads other loaders during the console’s boot sequence. With the LV0 key in hand, hackers now can decrypt and modify any new PS3 firmware.
The LV0 was extracted by a hacking group called "The Three Musketeers" who decided not to release it. However, after another Chinese hacking group managed to steal the key from them and used it to develop and sell BlueDiskCFW for profit, the team got enraged and decided to release the key publicly.
This opens the door for the development of PS3 custom firmware and dual boot loaders among other things.
