Altcoin Spotlight: Arweave (AR)

Each and every day new cryptocurrency projects are popping up while others are going defunct. Although this week’s project, Arweave, isn’t really new, it is one which only recently began to gain traction and rise to prominence.

If you want to learn a little bit about the Arweave project and learn whether or not it might be a good investment for your portfolio, read on.

What is Arweave?

Arweave, sometimes abbreviated AR, is a fully decentralized cryptocurrency storage solution. What this means is that it is a blockchain built to store data and information for perpetuity. Those who wish to store something pay a fee, and the individual who stores in on their hard drive receives the fee for their space. The individual doing the storing is called a miner.

The cool thing about Arweave is that it runs on an HTTP protocol, meaning you don’t need any fancy technology or a special browser to access it. This makes it much more accessible than other similar blockchain projects.

The data, once collected and paid for, is stored in a block-based structure, which is why it is considered a blockchain. A group of these blocks on the Arweave platform is called a blockweave.

Something else interesting about Arweave is that files stored through their program are stored forever (or at least 200 years) for just one upfront fee. This makes it more cost-effective than competitors who charge routine storage fees, even those outside the cryptocurrency world, like Google and Apple.

Related: Introduction to the Solana NFT Marketplace

How Does Arweave Work?

You may be wondering how a one-time fee ensures your data will be stored forever with Arweave, and it is actually an interesting explanation. When someone wants to store data with Arweave, they pay one upfront price, which is paid into a pool. Then, they are matched with a miner offering storage, and the miner is granted a portion of what the individual paid upfront into the pool to begin storage.

In the meantime, the monies left in the pool are placed in investments to gain interest on the balance. The investment interest is then used to continue paying miners for storing data.

Currently, the price paid for storage is more than what the person who is storing receives initially, but it is managed by an algorithm that balances the amount that is paid out with the interest it receives, adjusting as needed. This means that while the upfront cost might be a bit steep compared to what the miner receives, it will eventually balance out and the person storing information will one day be paid far more than you originally paid, into perpetuity.

All of this is done through a proof of access consensus mechanism. To meet legal requirements, those who store data, do have the right to analyze and refuse to store any data.

When a miner requests to analyze a piece of data, a dapp filters the data so the sensitive portion of the content is not revealed. This is known as positive content moderation, and it allows Arweave to be fully community-moderated—meaning there is no centralized entity observing the blockchain and checking on the stored data.

Currently, Arweave works with the Internet Watch Foundation to monitor any stored data that may be part of the abuse or extortion of children.

Related: How to Improve Personal Data Privacy

Who Started Arweave?

Arweave was created by two doctoral researchers at the University of Kent, Sam Williams and William Jones. They came up with the project themselves and began working on it in 2017.

In 2018, the project officially launched and received its Arweave name.  Many investors were eager to come on board during the ICO in 2020, and Arweave has been baked fully by several different companies. Some of the big names invested in the project include Coinbase and Andreessen Horowitz.

Since its launch, Arweave has formed several partnerships, the most prominent being with Internet Archive, Solana, Avalanche, Cosmos, and Polkadot—all of which are blockchains that rely on Arweave for storing their data and blockchain history.

Should You Invest in Arweave?

Honestly, Arweave seems like an amazing project, and it is backed by seemingly reputable people. This means it is likely safe to use the system, especially if you have some of your own data to store or want to consider using them for your business data.

From an investment standpoint, however, we recommend proceeding with caution. While Arweave has an amazing idea for data storage, it's important to know that their method hasn’t yet been proven. Currently, many people are buying storage, which funds the pool nicely and keeps the platform growing.

But as time goes on, there is a possibility that the creators of the platform (or those who come after them) will discover that the algorithm they created for maintaining the pool and paying miners is insufficient. Obviously, if this happens, there could be terminal issues with the platform, especially if it is 50 years in the future and the creators aren’t around to adjust the algorithm.

Therefore, although Arweave looks like a decent project right now, it is important to approach any investment with caution since the project is unproven, though there are worse risks in the cryptocurrency you could be taking, Arweave seems to be at least a hallway decent project.

Plus, there are several large platforms investing in Arweave for their own storage, which is always a good sign indicating that the platform should have continued business into the future.

Overall, we really like the Arweave project as it is a breath of fresh air in a market that is currently saturated with way too many subscription-based products. But just because we think it is a good idea doesn’t mean it is a viable investment. So, if you are interested in investing in Arweave, proceed with caution and definitely discuss your decision with a professional.

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