Please tell me how this is possible? The properties of bitcoin back itself so it is not necessary but I would still love to see how it is possible.
If you could manage this feat it could be applied to problem domains other than the one bitcoin targets.

Those things are themselves "backed" by the conjecture that they exist in limited quantities and require a lot of work to produce.
Bitcoin solves the currency issue by generalizing this into pure math. Those who grok it see them as the best currency backing you can achieve.

You can check out the bitcoinj solve function here:
http://code.google.com/p/bitcoinj/source/browse/trunk/src/com/google/bitcoin/core/Block.java#210

When is the switch to difficulty two going to happen, or has it already?

Be careful and check with a good lawyer first.

You would probably be considered a money transmitter if you do this.

Being a money transmitter requires a large bond in most states.

I'd be very interested to see a post mortem on today's events from MagicalTux.

Gavin is on the record as not having a large amount of Bitcoin.

The 10,000 (?) he gave away on bitcoin faucet were purchased for $50.

I would have a script/program on the sending machine download the latest withdrawal requests and process them from there.
You could get close to real time depending on how often you run the script, or you could just run it once an hour after checking to make sure nothing seems out of the ordinary.

If you suspect someone has broken in you can just not run the script and they have no way of directly reaching your funds.

I can't speak to why someone else would do it but there are two reasons I would:

1. It makes maintenance easier.

Instead of locking yourself into maintaining a single ever expanding wallet.dat file forever you can refresh it occasionally. You can point new orders to a new install, wait 24 hours, transfer the funds from the old wallet to the new and have a trimmed down wallet.dat.

2. Security.

I think people are crazy for having a direct link between their web server and Bitcoin JSON-RPC.
If you are just accepting payments through bitcoin there is no reason to do this.
Instead you pre-generate 10,000 keys and take the wallet offline.
Load the addresses for these keys into a database and lock the private portion in a safe.
Now you can rotate the receiving addresses for whatever you receiving target window happens to be without risking someone breaking in to your wallet.
You could reuse these addresses forever without ever exposing your private key until you want to send.

If you trust it you can even verify payments totally offline by checking against blockexplorer.

(IMO, an open source block explorer would be one of the greatest security enhancements that could be made to bitcoin commerce.)

The configuration file reference is here:

https://en.bitcoin.it/wiki/Running_Bitcoin#Bitcoin.conf_Configuration_File

To run bitcoind you should just be able to extract the files and run ./bitcoind for the bin/[32/64] directory.

It will take quite a while to download the block chain to get up and running.

Once you start it type ./bitcoind getinfo and should get a response.

The articles aren't intentionally incorrect.

Imagine you have been given a deadline of a few hours to write an article on a complex subject you don't understand.
Maybe its some kind of new wonder drug that was just released that has all kinds of complex chemical and biological reactions.

Do you think you could write an article that chemists, biologists, and doctors wouldn't find either oversimplified or somewhat factually incorrect?

Most of the people who use bitcoin don't even understand all the technical ins and outs. I feel sorry for the reporters who have to make heads or tails of it without having the luxury of spending months studying it.

Your friend has an advantage in that he runs an actual brick and mortar business.

He could probably make a tidy sum by accepting payment in Bitcoin then advertising that he will exchange Bitcoin for AUS.
Local Bitcoin enthusiasts would probably flock to his door to buy Bitcoin face to face.

I've had a hard enough time explaining it to people who are software developers with crypto backgrounds.
Common folk have no chance.

When I do try to explain it I have to basically simplify it to the point that what I'm saying is completely incorrect.

I leave out the part that only a fraction of the 21M exist.
Then I just say there is a closed system of 21M tokens that will not get larger and they are spent by encrypting them to someone else.

None of that is correct but its the closest I can get without having peoples eyes glaze over.

It would probably be best not to try to build one in C# if you want to be mining for profit.
You will be competing with miners running against bare metal gpus.

Second, you would need to port the whole protocol to c# first if you want to actually mine directly from the network.
This is a huge undertaking. Bitcoinj is still working on it and thats being done by people who understand the protocol.

If you really want to see how the mining works you can look at this piece of code from bitcoinj:
http://code.google.com/p/bitcoinj/source/browse/trunk/src/com/google/bitcoin/core/Block.java#203
That part is easy.... its everything going on around it that you have to implement first that will make you pull your hair out.

DNS is a step forward in speed but also a step back in functionality.
Encoded in the IRC nicks is the port the peer is listening on. The DNS peer lookup has no way to do that the moment.
This means DNS discovery can only use the standard port which makes blocking peer bootstrapping much easier.
Not a big issue right now but it does need to be addressed at some point.

I believe the last couple of bytes is a checksum of the address.

I like it! Very nice!

It is technically possible.
If a high profile enough theft occurred it could be returned to the previous owner if enough nodes in the network agreed.
It would require hard coding the theft transaction and return transaction into the client.

For all that people complain about paypal and credit card fees the repudiation and dispute resolution they provide is very valuable and worth paying for when it may be necessary.

The 1MB limit is an arbitrary limit that will eventually be removed. Thats just for the block... the collection of transactions that is created ("mined") on average every 10 minutes. If you maxed out the current 1MB limit the block chain would grow ~6 MB an hour.
The limit would be removed long before this happens.

No matter how large the block chain grows a non-miner can operate with just the 80 byte block headers. This means no matter how many transactions occur you would only need ~4.5 megabytes of storage at most. Realistically you could start tossing old headers with check points and get it down to much lower.