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Well a modchip gets hard wired and can completly bypass any firmware and checks. It goes straight to the root of the hardware and when one is perfected it will enable you to do pretty much anything. I'm not saying it will be anytime soon but I am saying that its what we need and will beat software hacking any day.
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Let me say that modchips definately DO NOT work as you suggested.
I used to write code for the modchips and installed hundreds of them back then.
the models of the playstations were something like scph1002, 5002, 7002, 7502, 9002, 9502. It started out that each different model required a different modchip code, some were then made to work in all models except 9502 and then after about 2 years there were chips that could boot any model.
Some games even had a modchip detector and wouldn't run, so we had to put a button on the PSX to disable the chip after booting. Then finally that was sorted with just the chip.
lets say you do get a chip that works for any current firmware. Sony just has to write a modchip detector function into a few new games and there you go... new chip required. It really isnt any different than the current work on all the new firmwares.