You should not have become offended. You should have welcomed the idea in general, as a compliment, and acknowledged it in a positive way, but declined to participate based on the practical concern with the data security.

There was no cause for being offended. He is not at fault for the lack of data security on the internet.

Your feeling not right was justified, because you can feel "not right" whenever for any reason without cause - I personally do not understand why you felt not right and what your concern was - if the concern was privacy, you could have shown him body parts and not your face, but at any rate, you are free to feel "not right" in an idiosyncratic way. "Offended" is different:

of·fend (-fnd)
v. of·fend·ed, of·fend·ing, of·fends
v.tr.
1. To cause displeasure, anger, resentment, or wounded feelings in.

In other words, by being offended you hinted at his having caused your feeling not right, and he did not do anything wrong.

So I would write a nice note to him, saying that you would love to share naked pictures with him but would not, purely out of fear of hackers.

All the other stuff about emotional blackmail, the talk about "needs" etc. is bad, but this isolated incident, alone and by itself, was OK - he did not do anything wrong. Except that asking for naked pictures in order to not look at porn was very lame - he should have been asking for your naked pictures out of pure enthusiasm for seeing them.

On a more practical note, if he ever asks for naked pictures adding that he wants to see them in order not to look at porn, tell him to go look at porn. This way you would nip his chain of manipulating you in the bud - if you say that he should look at porn to his heart's content, you would remove the button in you that he is trying to push.

Another remedy is to leave him altogether.