Yes, those are the only files you NEED to back up, if all you're worried about is not losing your coins. But backing up the blk*.dat files would be a good idea too, as it will save you from having to download the whole blockchains again (be sure to enable "Detach databases at shutdown" if you're using Bitcoin 0.6.2 or later).

Of course you can. This is the standard method, as some sellers don't trust online transfers and besides, your bank will probably charge you a fee for that. Also, you don't need an account at the same bank (or any bank for that matter) to make a deposit to someone else's account. If the account is at the Bank of Foo, you can just walk into any branch of the Bank of Foo, fill out a deposit slip with his account details, hand the deposit slip and the cash to the teller, take your receipt and you're done. They won't even ask for your name. What's the problem?

The only real danger is if the seller just takes the money without giving you your bitcoins, though the same risk is present regardless of what method you use.

In order to verify a transaction, you need to know that all of the transactions that came before it were also valid. Suppose Bob gives you some bitcoins. In order to verify that transaction, you need to know that Bob obtained that money from a valid transaction. Let's say he got the money from Alice. Now you need to know where Alice got the money. And so on, all the way back to the miner who first produced the coins. And that's just for one transaction. In order to verify all transactions sent to you, you need to be able to verify every single transaction that has ever taken place in the history of Bitcoin, and this is exactly what the client is doing when it is synchronising with the network. When doing this for the first time, the client has to not only download the entire transaction record (which is currently nearly 4GB in size), but also verify every single transaction. This can take a while. However, once it has synchronised the first time, the client only needs to download and verify transactions that have taken place since then, so it is much faster.

Armory's offline wallets are secure against everything except physical access to your machine, and absolutely nothing is secure against that, so this is as secure as it gets.

I would buy BTC2000 at $8. Saying "will" implies that a drop to $8 is certain to happen at some point in the future. Why so pessimistic?

Not by itself (it doesn't report your IP or any other information to any central server), but like anything that connects to other computers over the Internet, other people you connect to may record your IP. The standard client (Bitcoin-Qt) allows you to connect through Tor if you're worried about that.

No. For one thing, ASICs and FPGAs can be constructed for any computable function, ie, anything a CPU can do, an ASIC can be constructed to do it more efficiently. It's just a question of whether it's worth the development cost.

This is the second thing. The purpose of mining is not to allow "anyone" to create free money by burning spare CPU cycles all day. The purpose of mining is to secure the network from attack. Nothing more. One of the larget threats is posed by mining botnets, and such botnets will have access to a lot of powerful CPUs and some decent GPUs, but almost certainly no suitable FPGAs or ASICs. Litecoin and other "CPU-friendly" coins are ipso facto botnet-friendly, and there is a very real danger that an attacker with a reasonably sized botnet could pull off a 51% attack against Litecoin. On the other hand, by requiring specialised hardware to mine efficiently, Bitcoin also requires specialised hardware to attack efficiently, making it much more secure against attackers using conventional hardware.

Ouch. Oh well, at least it's an easy fix and we've got over 250 years to implement it...

Actually, since bitcoins are only divisible down to 8 decimal places, the reward drop will indeed "lose accuracy" on the 10th halving (sometime around the year 2048), when the reward will drop from BTC0.09765625 to BTC0.04882812 (it is always rounded down to the 8th decimal place, so there will be no confusion about it when the time comes).

Your wallet is decrypted only when it is necessary for the program to access the keys to your addresses, ie, whenever you spend your bitcoins or create a new receiving address. You (and anyone who gains access to your wallet) will be required to enter your passphrase to perform these actions. The client does not provide any built-in way to remove encryption from a wallet, as this is never necessary and extremely unwise in any case.

Correct.

Unless you're able to recover the wallet from the formatted drive (which is a long shot at best and usually impossible if you've been using the reformatted drive for any length of time) or from a backup, then yes. Hence the importance of backing up your wallet!

Your wallet contains the keys to your address(es), allowing you to spend coins sent to them. Click Recieve Coins in the client to see a list of your addresses. You will already have one address by default, and you can create as many more as you want.

Because your wallet contains the keys needed to spend your coins, if you ever lose your wallet, you will lose the ability to spend your coins. This is why it is so important to back up your wallet. But before you do that, you should first encrypt your wallet, otherwise anyone who manages to gain access to your wallet will be able to steal your coins. Once your wallet is encrypted, a passphrase is required to spend your coins (but do not forget your passphrase - if you do, you won't be able to spend your coins).

Once the coins are in your wallet, you can do whatever you want with them. Buy things with them, donate them to charity, sell them for dollars, whatever. When whoever you're doing business with is ready to accept your bitcoins, they will give you a Bitcoin address to send your coins to. Click Send Coins in your client, enter the address they gave you and the amount of bitcoins then click Send. Easy as that.

After you create an account on an exchange site, you will be given a deposit address to send your coins to.

You mean, aside from the fact that that's the German sz ligature, and the word "bitcoin" contains neither an s nor a z?

It is impossible to reject coins under circumstances except double-spending (ie, trying to re-spend a coin that you already spent and no longer own), or rather, it is impossible to prevent other people from sending coins (regardless of their origin) to you. All proposols to prevent "tainted" bitcoins from circulating fall down on this point.

For example, suppose you receive a bitcoin that you believe to be stolen. What then? You can't keep it while refusing to accept it as payment as you would with a counterfiet $100 bill, since the bitcoin in question is provably not counterfeit and absolutely genuine in every way. You also can't send it back since it is impossible to know whether the sending address actually belongs to the person to sent it (if they were using an online wallet for example, the address would belong to wallet provider, and not the individual who sent the coins). There is literally nothing you can do about it except accept the tainted bitcoin as valid payment.

It is if the seller agrees to it in exchange for a lighter sentence.

The long term trend consists of straight lines on a linear chart? Guess we're all doomed, then.

Slight correction: Satoshi can spend all the coins that have since been sent to that address (assuming he still has the private key, that is). Only the original BTC50 is unspendable. The rest are all perfectly valid and spendable transaction outputs.

We switch to another hashing algorithm, since SHA256 is obviously broken in that case (calculating a hash value less than 2 in any period of time absolutely can't be done by brute force, at least not in this universe).

The difficulty cannot increase or decrease by more than a factor of 4 in a single adjustment, specifically to avoid this problem. Note that even though this means confirmation times may be up to 4 times longer than normal for 8 weeks, each such confirmation will be 4 times as secure as a "normal" one, since 4 times the normal amount of processing power was required to produce it. It is the total difficulty of the blocks, not the sheer number of blocks, that is important (eg, in the event of conflicting blockchains, the one with the highest total difficulty, not the greatest number of blocks, is considered the correct one).

On the other hand, if a government (or any single entity for that matter) has far more hashing power than the rest of the network combined, we've got bigger problems than long confirmation times.

That is definitely your address. It is a change address created when you bet BTC0.001 on lessthan 64000 five days ago (transaction ID: b972604f080e8c22bf731679a6d8c04d092e2a8f00d64f5ec2979920d7b0a8d5). Since you didn't have any outputs (incoming coins sent to you in previous transactions) that were exactly BTC0.0015 (your bet plus the transaction fee), your client had to send a larger amount, and it sent the difference to yourself at a new address as "change". Change addresses are not displayed in the client, but you can receive coins at them just like any other address you own. You have, in fact, sent and received coins from this address many times, and this transaction appears no different than any of the others. The payout transaction for your win has been confirmed. Is your client fully synchronised?

It most definitely is not the same thing, if you have a small but non-zero chance of solving a block and many other people are doing the same thing. You can point to any member of this group and say "You're never going to solve a block, you're not doing anything for the network, so why even bother trying?", and you would be right most of the time. But some members of the group will manage to solve blocks against the odds, and this does help the network. Pooled mining actively encourages this behaviour by paying out based on the probability of solving a block, however small that probability is. Most blocks are in fact solved by pools, not by solo miners, so there's clearly something to this strategy.