[the_paul]

The encryption is done on the device. Other people's devices (obviously) won't have your encryption key, but since Space Monkey will have a web interface to get at your files, you can tell that Space Monkey will have access to your key.

Regarding durability, the Kickstarter page mentions:

    Q: Is my data safe?

    A: Yes! Super safe. Here’s why: when you put files in
    Space Monkey, you not only have a copy of everything on
    your Space Monkey device, but each file is chopped up into
    tiny pieces, encrypted, then stored to dozens of locations
    outside of your home, in such a way that even if half of
    those locations were destroyed, all your files would still
    be safe.

We (yeah, I work there) are gonna be taking the reliability and privacy of the network VERY seriously; no one would want to use a storage service that loses your data.

[rsync]

I wonder if I may suggest the book:

_Normal Accidents_ by Charles Perrow

Please, please read this book RE: complex, tightly coupled systems.