There are all sorts of downsides to this approach, not the least of which is that Apple has maintained a tight grip over which apps make it on the App Store--sometimes with questionable results. However, there is also a major upside: iOS remains relatively safe from the installation of malicious software. I can let games and banking apps coexist with the knowledge that one won't play hokey-pokey with the other and surreptitiously help someone in a non-extradition country steal all my money. (Or, almost as bad, my high scores.)
Once you let pirated software on a device, however, this protection is largely compromised. Nothing prevents an ill-intentioned hacker from distributing a pirated version of, say, a popular password-management software that has been rigged to capture every keystroke and transmit it across the Internet to a remote server, where someone who just can't wait to ruin your life is standing by. Most significantly, this could be done in such a way that even the savviest of users wouldn't be able to tell without some in-depth analysis.
Making a run for it
What about jailbreaking? Jailbreaking is neither immoral nor, in most jurisdictions, illegal. And for good reason: It allows well-intentioned developers to explore the ins-and-outs of iOS, learning more about the way the operating system works and expanding its capabilities beyond what Apple mandates.
However, jailbreaking also eliminates the portion of iOS that prevents apps from peeking into each other's sandboxes. If used conscientiously, this is not necessarily a problem: Reputable developers of jailbroken apps are no more likely to try and steal your data than any honest software maker listed on the official App Store. On the other hand, pirated software or other maliciously-crafted apps that are allowed on a jailbroken device could install viruses that happily scour your information for juicy bits about your personal life, delivering them into the hands of the wrong person.
It's a scary thought, and this nightmare scenario is far from tin-foil-hat fear mongering: Windows users have had to contend with this kind of problem for years, often brought on by the installation of Trojan horses attached to pirated software. If there's just one reason to keep everyone away from pirating those one-dollar apps, this is it. And if the moral and legal implications provide extra fodder for your keeping your iPhone free of such software, so much the better.
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