First and foremost, a clear understanding of what a modchip is, and what it does, is required to answer this question.
So What Is a Modchip?
A modchip is a tiny electronic device that is used primarily to circumvent (or get around) the internal protection schemes within today's most popular gaming consoles, including the Xbox, GameCube, PlayStation 2, and other popular CD or DVD media based systems. The most popular use of a modchip is to play 'pirated,' or illegal game copies. Obviously this is illegal in most parts of the world, including the USA and Europe, and at a bare minimum the use of a modchip will void your console's warranty.
Now the Burning Question - Should You Use a Modchip in Your Console?
There are a few things to consider before making a decision to use a modchip in your console. If you read the above definition of a modchip, then you already know that its primary function is to basically allow illegal software on your console. If this is the reason you want to modify your console, then the simple answer is no, you should not use a modchip! With that said however, there are other factors that may perhaps come into play, where the use of a modchip can be deemed somewhat acceptable, at least in my mind.
But You Just Said Modchips are Basically Illegal?
In a way I did, but it really isn't the modchip itself that is illegal, its what you do with it. Using it to play pirated games is definitely illegal and breaks several copyright laws that I am aware of, and it cheats the game manufacturers out of their due profits for the games they develop and produce. Now I know what you may be thinking, because I thought the same thing in the past; games already cost too much! Laying down $40 - $50 for a game is a bit steep for people that don't have tons of cash to throw around, but consider this for a moment.
If every game that was being played in the USA was actually paid for, the revenue would be enough so that the game developers and publishers could actually lower the prices. Without the threat of piracy, companies would not have to waste millions of dollars devising new protection methods for their consoles and game software... these saved millions would equate into slimmed down pricing on newly released games. Of course, I don't have a shred of evidence in this article to prove this, as this is not my primary focus here at Video Game Strategies, but common sense would tell me that if a company can sell something for less, they would, as the overall number of units sold would make up for the dollar losses per game.
OK So Modchips Are Evil?
Not at all, well, in some peoples' minds they are, but we'll let that slip by. The modchip alone will allow you to do nothing more with your console than you already can, legally. It is the additional software, the modified BIOS, and the illegally copied games that are the problem. Aside from that, and this is a very slim aside, modchips do serve a valuable purpose in the gaming arena, especaially in regards to cheats. You see - with a modchip - hackers, crackers, and wannabe coders can create some amazing game mods, like additional maps, super cool weapons, and much more. Also, modified consoles can be used to test pre-release code, good only for a small section of the gaming community, and there are alternative debug units for this purpose as well.
I'm Really Starting to get Bored, Can We Fast Forward to the Main Point?
Absolutely. In fact, my guess is that you have already come to the conclusion that the use of a modchip is not the way to go, unless you plan on using only games that you legally purchased, and utilize the modded console for entertainment purposes only, and are aware that opening your console will immediately void your warranty. Some companies, such as Microsoft, will ban you from their online services if they detect a modchip is installed on your console, so think it over before you install one.