Bitcasa launched at TechCrunch Disrupt yesterday, offering “infinite storage” in the cloud at the remarkably low price of $10 per month. The company treats your local hard drive as a cache, storing recently changed and frequently accessed files for speed. According to Sarah Perez at TechCrunch, Bitcasa is able to keep prices low because “60% of your data is duplicate. If you have an MP3 file, someone else probably has the same one.” In other words, Bitcasa may actually only store 40% of your data. When you want to listen to a song or watch a movie, the chances are that you actually access someone else’s copy. But for this deduplication to work, doesn’t Bitcasa need to know what your data is, and be able to read it? If everything is encrypted by the client (before any data leaves your computer) as VentureBeat’s Matthew Lynley clearly states, how will this actually work? And what happens when the owner of the single copy of the movie that Bitcasa kept decides to remove their data from the service? The challenges facing this service are far greater than today’s coverage suggests.