The hack is now back! 
. Its now possible to enable Tethering on iPhone OS 3.1.2. And I have tried this and appears to be safe!
What’s Internet Tethering?
Internet Tethering is a technique that allows a user to use his/her iPhone as a wireless modem to share its Internet connection with a computer via USB cable or Bluetooth interface.
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Create a WiFi Hotspot to connect mutiple laptops or mobile devices and share the iPhone’s internet connection (May it be EDGE or 3G).
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40 bit and 104 bit WEP Security
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Ability to enable USB and Bluetooth Tethering on your iPhone as well
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Uses less battery and much faster then PdaNet due to native routing
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Broadcasts the Network Name (SSID) – no need to fuss with creating an adhoc network on your laptop
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Enable iPhone USB/Bluetooth tethering – even on firmware 3.1!
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Shows up and down bandwith usage
Feels interesting? But unfortunately, AT&T blocked Tethering for its users. But now, there is an app called “MyWi” which enables tethering on all iPhones (including 2G(EDGE)/3G/3GS) on iPhone OS 3.1.2 in just 5 simple steps on your Jailbroken iPhone!
Some of the notable features of MyWi are:
Installation Steps:
These steps work fine on iPhone 2G(EDGE), 3G, 3GS:
Step 1: Goto Cydia, search for “MyWi” app and install it. MyWi will also install "RockApp” as a part of its package. Install RockApp manually if it isn’t installed automatically with MyWi app.
Step 2: Now start RockApp and create a free Rock ID for yourself.
Step 3: Sign in using this ID in RockApp and you should now see an update to MyWi app. Restart your iPhone once the update has been successfully installed.
Step 4: Start MyWi app and turn on the option for USB/Bluetooth tethering.
Step 5: Now simply navigate to Settings->General->Network->Internet Tethering on your iPhone and turn on the toggle for Internet Tethering.
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