[deckar01]

It doesn't seem like anything is actually encrypted, just randomly distributed amongst nodes in small enough pieces so as not to provide any useful information about the original data.

Since the paper states that all nodes must collude to recover (not decrypt) the data I would assume that the pieces are encrypted asymmetrically for each node to ensure a sufficiently powerful man in the middle (cough NSA) doesn't just reassemble the pieces.

[GuyZ]

This is actually a form of encryption (See - https://en.wikipedia.org/wiki/Threshold_cryptosystem). It is encrypted in the sense that combining any number of pieces smaller than the defined threshold won't leak even a single bit of information.

[deckar01]

The difference is encryption is usually associated with obscuring data with a key that you keep secret. In this system you broadcast out all the pieces needed to reconstruct the data. No secrets, just inconvenience due to distribution. It is not very inconvenient for an adversary that is already collecting all of your communications.

[drdeca]

I would assume that one could just use asymmetric crypto to send the parts of the data to the different parties?