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The need for data storage is related to the very beginning of digital data processing. Data were first stored on floppy disks, magnetic tape and at the end on hard disks. Today, in order to save data we can use some of traditional storage systems like DAS, NAS, SAN, Client server systems and peer to peer systems. Peer to peer systems have resources which they share with other peers on network. Existing peer to peer systems are based on WAN connection links, implementing overlay network in order to achieve connectivity with logical addressing scheme. The most important issue that peer to peer systems have to provide is availability of data using some sort of replication and redundancy. Usually this is implemented using file replication or erasure code. In this paper we will present design of peer to peer based distributed system for data storage inside local computer networks, with file replication. File replication relies on introduced algorithm for storage management.