What would happen?

[btc123]

The balance in my wallet fluctuates up and down quite a bit.  I backup my wallet maybe once every couple of weeks.
What would happen if my computer crashed and I restored a wallet that has more bitcoins in it than the wallet that I lost?

Would the system know which coins I no longer hold or would my transactions fail a lot?

[evoorhees]

The wallet backup will still know how many coins you're supposed to have, as long as you haven't created more than 100 btc addresses.   So, if you're only using one address to send/receive, then you can make a backup and come back years later and that backup will show your entire transaction record since then.

This is because your wallet doesn't actually hold "coins" in it, but rather it holds a key to access the coins in the Blockchain. Since the blockchain always knows how much money you have, the wallet backup will discover that information once it's plugged back in.

[BadBear]

What will really happen is you'll restore the wallet file, and the bitcoin client will use the blockchain to verify and update the latest transactions and your current balance. Once a transaction is in the blockchain, it can't be undone.

Think of it as more like a ledger system, your wallet doesn't really contain any bitcoins, just private keys that are verified by the network as possessing those coins.

[btc123]

Good to know, thank you.  Why is there a hard limit at 100 and what happens if I go over 100?
Several forums that I've read recommend that I use a new address for each transaction.  That would add up real quick.

[BladeMcCool]

the client will create more addresses automatically but those new ones wont be in your old backup so you'll need to make a new backup if you use more. i think it generates them 100 at a time but i could be wrong. this is the default satoshi client i'm talking about anyhow.

[Stephen Gornick]

Good to know, thank you.  Why is there a hard limit at 100 and what happens if I go over 100?
Several forums that I've read recommend that I use a new address for each transaction.  That would add up real quick.

The client tries to keep 100 unused private keys available in a "key pool".  So the first time an address from your wallet receives a payment the client then marks that address as being used which brings the number of addesses in the key pool below 100.  The client then adds a new one automatically.

You can specify on startup a size of the keypool so that the client will keep a greater number or fewer number of unused keys.
 - http://en.bitcoin.it/wiki/Key_pool

[beckspace]

The client tries to keep 100 unused private keys available in a "key pool".  So the first time an address from your wallet receives a payment the client then marks that address as being used which brings the number of addesses in the key pool below 100.  The client then adds a new one automatically.

Is this true?

I always thought that if I had a backup that was in address 98 (for example), and used the client until address 110 and lose the wallet.dat at that point I'd be screwed.

I thought that the client generated another 100 addresses at once just when the number 100 was reached, good to know it's not that way.

[notme]

The client tries to keep 100 unused private keys available in a "key pool".  So the first time an address from your wallet receives a payment the client then marks that address as being used which brings the number of addesses in the key pool below 100.  The client then adds a new one automatically.

Is this true?

I always thought that if I had a backup that was in address 98 (for example), and used the client until address 110 and lose the wallet.dat at that point I'd be screwed.

I thought that the client generated another 100 addresses at once just when the number 100 was reached, good to know it's not that way.

Yes... the idea of a key pool is is to keep the pool full.  Swimming on concrete is no fun.

[beckspace]

The balance in my wallet fluctuates up and down quite a bit.  I backup my wallet maybe once every couple of weeks.
What would happen if my computer crashed and I restored a wallet that has more bitcoins in it than the wallet that I lost?

Would the system know which coins I no longer hold or would my transactions fail a lot?

It's a prudent practice always use new addresses and backup your wallet not every couple of weeks, but every 50 transactions or so (Keep your fuel tank at least half full).