Sony of course immediately fought back, first banning the altered OS from the game network and then releasing updates that were not compatible with the loophole. OS on the PS3 cannot be downgraded.
Then, the hackerz fought back and again sold a PSdowngrade device that would allow you to go back to a previous version of the Operative system. Same path, an open source version is released called PSgrade (it's on github) but to work it needs a key associated to your own device or.... a master key.
To the point that someone got two PS3: one hacked for solo playing and one originale for networking!
I'm going to naively presume it's something to do with being able to run unsigned code on the PS3?
PSGrade (as mentioned in the post) is open source: http://www.ps3exploits.com/2010/11/open-source-downgrade-on-...