It’s stright peer-to-peer, being served up from a hard drive on my home network to the remote browser. AFAIK encryption is not availaible via this service, but no copy resides anywhere else (except Homeland Security’s servers, I suppose) unless someone downloads it locally at their end. The major limitaton is that upload speed is throttled by most ISPs, my cable (basic service level) modem clocks out at around 1.5M down but only around 275K up. Still, sharing to a small number of users is simpler this way than using one of the photo hosting sites or uploading to a web site.
You can tag a file, and it them becomes searchable on at izimi.com, but if you don’t know (or can’t guess) the tag or user-ID there is no easy way to find it - for example I tagged that one with “duct”, so a search on that tag will find and display a thumbnail (from the copy on my disk), or if you know my user name you can search that way, but without one or the other there is no way to find it.
Probably there are encryption clients for browsers that will dynamically en/decrypt these files (all izimi knows is that it’s a file, it doesnt care what kind) but as I’ve no need for this level of security so I have not looked into doing this.
Likely, the biggest security risk is that someone will hack the izimi client - after all, it’s serving up files from your HD to the net, and I can see where it might be compromised to server up everything accessible on a local drive or a local network share, and I’ve taken some precautions to prevent that from happening on the PC running their client.