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Use GitHub Flavored Markdown #372
GFM isn't used inside Markup because the automatic links don't make sense outside of Github (see github/markup#47).
I think it would make sense to implement just the "treating newline as a new paragraph" modification though. GFM's code for this can be found at https://help.github.com/articles/github-flavored-markdown#code if someone wants to have a go at a pull-request.