What It Is
Hamachi is a secure virtual private networking solution. In layman's terms, what it does is set up several computer in their own private network. These computers can then communicate with each other securely over that network. What's really cool about Hamachi is that it is mediated by the Hamachi server. In other words, the Hamachi server makes the connection between all of the members of the network. Once that connection is made, no traffic flows through Hamachi's servers. The benefit of this method (and this is important) is that the originating connection comes from the client meaning that Hamachi is able to work through firewalls without opening any ports.
 Hamachi (see figure at left) is extremely secure. The mediation process by which the client logs into the server and announces its presence takes place via a secure public key/private key connection using RSA encryption. From then on, each message between the machines is encrypted as well using a symmetric cypher algorithm and MAC authentication. To prevent replaying of messages, each message is incrementally numbered. If you want details on how Hamachi deals with security, you can access them on the Hamachi site.
Notice that in the figure at the left, you can clearly see the IP addresses of my machines. These are the IP addresses that Hamachi assigned to me. They are in the 5.*.*.* range so that they don't conflict with any other IP address assignment. These are static addresses and they will remain the same meaning that I can set up name resolution to them via a HOSTS file if I choose. It's also important to note that even though you now know the IP address of all of my boxes, I'm still secure. Unless you are joined to my network, you cannot see any of these machines, and to join my network, you would need my network key, a 63 character, high-security password that I generated using Steve Gibson's excellent password generator. No one would ever be able to figure out my network key. My network (called CheshireNet) is as secure as any network out there.
What can you do with Hamachi?
Now that you kind of understand what Hamachi is, you might asking yourself just why you would want it and how it mitigates the security nightmare I described earlier. Glad you asked! Since you are creating a virtual private network (VPN) with Hamachi, any computer that's connected to your network can participate fully in that network. That means that you can map drives to them, remote desktop to them, etc. Suppose, for example, that you want your mother-in-law to install a specific patch to some software she has. You can either remotely access her computer and do it yourself, or you can just download the patch from the Internet and save it right to her desktop without even interfering with her work! Brilliant!
Is this safe?
You bet! Hamachi is completely secure. Any information you send and receive via Hamachi is encrypted and only you and the other party have access to it. If you want all the details, listen to Steve Gibson's Security Now! podcast on the topic. He goes into a lot of detail on the specifics.
Overall
The best way to be sold on Hamachi is to download it and give it a try. I think you'll be as amazed and impressed as I am. It's on all of my machines now, and I really wouldn't ever want to be without it again!
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