This is a moderately big deal, but only that; it's a stepping-stone to a real big deal down the road. What the Venter Institute has done is synthesize a genome that reproduces the genome of an existing organism, then insert that genome into the body of an existing cell, replacing its own DNA. That cell was then able to self-replicate, indicating that the synthetic DNA copy was sufficiently complete.

"Synthetic" here doesn't mean artificial, by the way. The DNA of the synthetic genome comprises the same base pairs and nucleotides as a natural genome, but was synthesized in the lab rather than replicated from an earlier cell. The best analogy I can think of is if, rather than copying the MP3 of your favorite song, you pulled together a really sophisticated music creation application and reproduced the song yourself, exact in every detail. It's the same, but a synthetic version.

If that sounds like a lot of work to get something that is essentially the same as the natural/original version, you're right. But this step was never the real goal -- it's just preparation. The real goal is to create an entirely novel life form, comprising both entirely new DNA and an entirely new cell. That's still to come.

Where we aren't:

The synthetic genome created by the Venter Institute is a streamlined version of the original Mycoplasma mycoides bacteria, containing enough of the original code to replicate and function as M. mycoides. Adding transgenic features -- that is, genetic material copied from non-M. mycoides species -- should be fairly straightforward, as it's essentially doing standard bioengineering.

In principle, this should actually be somewhat safer than current transgenic biotech, as they'll have much more precise control over the engineered genomes.

The ultimate goal would be to create an entirely new bacterial species by creating genes that do new things, or by combining diverse known DNA sequences to create a functional, replicating bacteria that doesn't mimic any existing species. This will be hard, but clearly not impossible.

The bonus goal:

The cell in which the synthetic DNA is housed already existed, but with different DNA (it was the cell of a related species of Mycoplasma). One likely future step will be to create an entirely synthetic cell by throwing together the right set of proteins in just the right way. Like the latest breakthrough, that will undoubtedly start out by simply reproducing an existing cell structure. Ultimately, they'll want to create cellular bodies that have novel features, such as (conjecture here) additional mitochondria for added power.

Where we go:

So what does this all mean?

The idea is to turn bacteria into microscopic machines, carrying out designated tasks in massively-parallel operations. Given the extreme range of things that bacteria can do in nature, the extent to which bacterial machines might be used is pretty staggering, particularly concerning environmental response. This would be a perfect platform for methanotrophic remediation of melting permafrost, for example; the Venter folks are already talking about building synthetic bacteria to do carbon capture. Biofuels are also high on the agenda.

The big concern about synthetic biology is the potential for the creation of hazardous materials -- aggressive, infectious bacteria, for example. We should also consider, at the same time, its biomedical potential. Are there ways of delivering drugs via synthetic bacteria?

One advantage of the big splash this relatively modest development has made is that it opens up the possibility of laying out the parameters of what ethical, responsible management of this technology would look like before have to confront its fully-developed form.

Should we require a "shut-off" gene in any novogenic organism, one that kills the cell if certain conditions are (or aren't) met? A reproduction-limiting set of genes that only permits replication in the presence of a rare chemical? Public registration of all novogenic genomes?

One suggestion that we know is possible, because a variation appeared in the Venter announcement: all synthetic genomes should be signed. According to Wired:

“They rebuilt a natural sequence and they put in some poetry,” said University of California at San Francisco synthetic biologist Chris Voigt. “They recreated some quotes in the genome sequence as watermarks.”

What Voigt refers to as a "watermark" should instead be thought of as a "DNA signature." We should require that all synthetic genomes include something like this, unique sequences following a designated pattern, identifying the organization behind the genome, the lab responsible, the date, and any other useful bits of information. Multiple copies should appear throughout the synthetic genome, so it doesn't get mutated away.

That way, if something unexpected happens, we know whom to talk to.