Whitepaper briefly goes over this. The user or application software get to decide their replication number N. The network is self healing, as in if a portion of a file misses a heartbeat(check in) the network will recover it from the other peices.

To affect a file large amount of nodes would have to go down simultaneously. Again the user has control over this N = 1 - Data failure N = 3 - Good for just average cases. Probably still Sybil attacks possible if the have 20-30% of the network. N = 100 - Are you expecting tactical nuclear strikes or acts of God?

Cool thing is if you increase redundancy to a large number Storj starts to act like a CDN or torrent network. But thats outside the scope of your question.

>Are you expecting tactical nuclear strikes or acts of God?

Are you not?

I'm also curious to see what happens in the beginning, and if it hits the elbow, when there isn't sufficient storage space on the network to meet demand.

Already anticipated that. We can just run the Storj client on your traditional cloud VPS. If there is market need those can be booted up in a couple of seconds by our team or anyone who wants to set that up.

Because VPS providers profit margins are so high vs a typical home user, they will be eventually replaced, but it allows Storj to scale pretty quickly using the traditional cloud as network nodes.