We generate a new 2048-bit RSA public/private key pair when our client is installed, store the public key on the local disk and transmit the private key to our datacenter via https. Then, for each backup session, we generate a new random 128-bit AES symmetric key which we use to encrypt the user’s data. We secure the 128-bit AES key by encrypting it with the user’s public key and transmit the encrypted file along with the encrypted key to our datacenter over https. We destroy the unencrypted 128-bit AES key at the end of each backup session and never write it to disk. To decrypt a file, the user’s private key is used to decrypt the 128-bit AES which is then used to decrypt the file.
You can specify your own password for the keystore. If you do this, they can't access the keys (well, outside of nefarious sniffing we'll assume for the moment they aren't doing). You also can't access your data if you forget it.
We generate a new 2048-bit RSA public/private key pair when our client is installed, store the public key on the local disk and transmit the private key to our datacenter via https. Then, for each backup session, we generate a new random 128-bit AES symmetric key which we use to encrypt the user’s data. We secure the 128-bit AES key by encrypting it with the user’s public key and transmit the encrypted file along with the encrypted key to our datacenter over https. We destroy the unencrypted 128-bit AES key at the end of each backup session and never write it to disk. To decrypt a file, the user’s private key is used to decrypt the 128-bit AES which is then used to decrypt the file.
http://blog.backblaze.com/2008/11/12/how-to-make-strong-encr...
With pictures and everything. I'm not one of their users, but that page was interesting to read.