So if it was sent to an new address and I don't have a backup it will be lost?
Yes, because You don't have the key for the new address.
What happens if I did spend money and my backup comes from before I spent?
If the original client created a new address (hidden), the small amount of money on that new hidded addres could be lost.
Not always these hidden addresses are created.
For example, my first transaction was like this:
I had 0.008 BTC on my wallet (0.005 from Faucet and 0.003 from Dailybitcoin).
I sent 0.003 to the Free software foundation (FSF) as a experiment.
The fee size was 0.0005 BTC.
0.005 coins was used.
0.003 BTC were sent to FSF.
0.0015 BTC were sent back to me, in a hidden address.
0.005 = 0.0005 (fee) + 0.0015 (hidden address) + 0.003 (FSF)
You can search these hidden addresses with Blockexplorer:
http://blockexplorer.com/PS: IMHO these hidden addresses are a problem.
The sounds uncharacteristically stupid compared to the rest of the design of the system. Why does it do this? Can you prevent it? Is there a client that prevents this?
I know online wallets prevent you from having to store locally and backup but I don't like the idea of my wallet being out of my possession.
What's the deal with Armory? Does it eliminate all these problems? Does it allow me to have full control of my wallet or is it stored by a third party?