Topics Altcoins
Bybit Learn
Bybit Learn
Intermediate
19 Th01 2022

Arweave (AR): What Is It?

It’s probably no exaggeration to say that the world as we know it today is unimaginable without the internet. Thanks to this groundbreaking technological invention, people everywhere are able to instantly access information with the click of a button or the touch of a screen. But did you know that a few centralized organizations manage most of the information that’s online? In fact, global tech companies and governments have enormous power to influence what we see, hear and do on the World Wide Web (WWW).

The inception of blockchain has turned the tables and spurred the process of decentralization, which includes the storage of information. However, most blockchains rely on external protocols, since on-chain storage is expensive and, therefore, not feasible for storing huge volumes of data. 

In this article, we’ll discuss the crypto project Arweave — an innovative protocol that allows data to be stored permanently in a decentralized manner. We’ll also cover the technical aspects of the AR cryptocurrency, which grew by over 600% in the second half of 2021.

What Is Arweave?

Source: arweave.org

Headquartered in London, Arweave is a new-generation decentralized storage network founded by Sam Williams and William Jones in July 2017. Arweave can be considered a decentralized protocol that uses a blockchain to store global information securely and permanently. Its mission is to minimize developer restrictions while creating a long-term vision for the internet as a whole. 

A large amount of data published on the internet is lost daily. There are various reasons for this. The storage methods that we currently use are vulnerable to hackers, and published data on the net can be lost over time due to user negligence. 

One major source of data loss on the internet is broken links. For many websites, links are typically the only way users can find information. Once a link is broken, the related website is moved to the dark web and can’t be found by any search engine. Because of this, all the data present on the website is at risk of being lost forever — not to mention the threat posed by centralized organizations, which have the power to manipulate or eliminate previously published data. 

With Arweave, data loss or manipulation on the internet can be eliminated completely. The innovative blockweave protocol they’ve developed provides an inexpensive, scalable solution for on-chain storage and users can archive information on websites forever. 

Its P2P protocol allows various users (nodes) with large storage spaces on their hard drives to connect with the Arweave network, and to store data for others. The network then rewards these nodes for offering their storage services. As the volume of data stored in a particular system increases, the amount of hashing needed for the consensus decreases, resulting in more cost-effective data storage. 

Apart from storage, the Arweave network is a great platform for developers looking to create more efficient decentralized applications. The network’s flexible APIs allow programmers to build DApps over blockweave seamlessly. To date, over 300 functioning DApps have been built on the Arweave blockchain.

What Is AR?

AR is the native token of the Arweave blockchain and has multiple use cases within the ecosystem. Of its 66 million maximum supply, over 55 million of the tokens were minted in the genesis block at the launch of the Arweave mainnet in June 2018. The remaining tokens will be minted as block rewards for Arweave nodes. As of this writing, there are over 33 million AR tokens in circulation. After the minting of 33 million additional AR tokens, this crypto will become deflationary. 

What Is AR Used For?

The AR token possesses immense utility within the Arweave ecosystem. For starters, all transaction fees on the Arweave network must be paid in AR. This includes the fees for storing and retrieving data, and for interacting with various DApps built on the network. Users who wish to store data on the Arweave blockchain must use AR to pay for distributed data storage. Also, computers on the network that offer storage services must accept their incentives in AR tokens only. 

How Does Arweave Work?

The workings of the Arweave protocol can be best understood by looking at the two layers involved: blockweave and permaweb

Blockweave is different from the typical blockchain that many cryptos are built upon. Apart from storing transactional information, blockweave also stores the data information on each block. 

Like other blockchains, each block on blockweave refers to its previous block. On blockweave, however, this previous block is attached to a randomly selected block known as the recall block.

The Arweave protocol enables this architecture by deploying a brand-new consensus mechanism called SPoRA, a proof of access. This consensus rewards the participating nodes in the network for storing all of Arweave’s transactional history. Let’s say you want to manage a node on the Arweave blockchain. To receive block rewards, you must prove to blockweave that you have complete access to the data in the previous block, along with some randomly selected recall block.

If you don’t have access to the recall block, blockweave will know that you aren’t storing all the transactional data on the Arweave blockchain, and will thus deny you any block reward. This encourages node participants to store as much data as possible, although they don’t have to — it’s impossible for them to know which previous block of data the system will require in order to earn the block reward.

The other main component in the Arweave network is permaweb, a decentralized web built on top of the Arweave blockchain. This is where all of the Arweave DApps are stored. These DApps can be accessed using multiple gateways that seem like regular websites. Also, the Arweave protocol uses HTTP, enabling permaweb to interact with the WWW.

Key Features of Arweave

Ease of Use

Despite the seemingly complicated workings of the Arweave network, all technicalities fall within its back-end operations, while the network’s front end is simplified for the best user experience possible. Storing websites on the Arweave blockchain is as simple as creating a bookmark on your browser via Arweave’s browser extension. Pages saved using this extension can be viewed and shared by other users in the decentralized network.

Immutability 

We mentioned previously that data stored on Arweave is permanent and can’t be tampered with. Arweave applications are also permanent — their rules cannot be altered or changed, even by the creators of the applications.

User- & Developer-Centric Ethos 

As applications can’t be modified or updated, the Arweave protocol rewards developers and encourages them to ensure the quality of applications they build. It also pushes developers to build and engage the communities who use their DApps, as this helps smooth the migration to the modified version of their DApp.

AR Tokenomics

Source: CoinMarketCap

Note: Figures below are accurate as of this writing, and are approximated up to two decimal places.

Total Supply — 63.1 million AR tokens

Maximum Supply — 66 million

Circulating Supply — 33.3 million (51% of the total supply)

Market Capitalization — $1.4 billion 

24-hour Trading Volume — $11 million

Price — $43.23

Pros and Cons of Arweave

Pros

  • Data, a critical component of advanced technologies such as machine learning and AI, is king in the 21st century. The Arweave protocol is a robust blockchain network which could potentially revolutionize the way online storage and data management works.
  • The Arweave blockchain is capable of handling over 5,000 transactions per second. Considering the complex consensus that’s involved, this is quite a feat. 
  • The AR token has immense utility within Arweave’s ecosystem, as well as a pretty stable historic price action. Holders of AR stand to benefit greatly from the adoption of the decentralized storage services that Arweave offers.
  • Partnerships with Solana, in addition to the Arweave founders’ experience-rich backgrounds, increase the credibility of the Arweave project.

Cons

  • We’re skeptical about the protocol tackling the scalability issue when addressing the global market. If Arweave fails to hack issues related to scalability, the project might take a downturn, causing the AR token’s price to drop drastically.
  • Without any doubt, Arweave’s innovative technologies are great and are now required more than ever. However, this could become a potential drawback because of the competition the project could attract — e.g., competitors could come up with better, more feasible solutions based on the Arweave Network.

Is Arweave (AR) a Good Investment? 

After analyzing the AR token’s historic and recent price action, the crypto is poised for exponential growth in the coming years. According to WalletInvestor, the AR token is currently undervalued and could surge by over 108% in a year. Most interestingly, their algorithms predict AR could reach $371 in less than five years. These growth forecasts are supported by the increased interest in the adoption of decentralized storage systems in the industry. 

Buying AR

The Arweave token (AR) can be traded on a few cryptocurrency exchanges that support derivative trading as a USDT perpetual contract. On Bybit, you can trade the AR/USDT pair by following the steps below. 

Step 1

You must be a registered Bybit user to trade any cryptocurrency asset class on the exchange. If you already have an account with Bybit, skip to the next step. If not, you can complete the sign-up procedure in a few minutes by visiting the official Bybit website and clicking on Sign Up

Enter a few basic details, such as your email ID, and create a secure password. Finish the registration process by confirming the password, and click Continue. Make sure to complete the quick verification process so that you can transact fiat money on the Bybit exchange.

Step 2

Since the intention is to trade the AR/USDT asset class, you need to deposit USDT onto the exchange. To do that, you can directly visit the derivatives section on Bybit and search for the AR/USDT asset class. On the extreme right of the trading terminal, you can see the Deposit button, with which you can load the USDT tokens onto the exchange. You can also buy USDT or exchange your existing cryptocurrencies for USDT.

Step 3

After depositing the USDT as collateral, you can use a limit, market or conditional order to place a trade. If you’re using a limit order (which we recommend), enter the price at which you want to enter the market, and the quantity of AR contracts you’re willing to trade. Once done, you either go long or short based on your analysis and market conditions. All of your ongoing trades, order history and unrealized P&L can be viewed at the bottom of the trading terminal.

Source: Bybit | AR/USDT

Step 4

We recommend using a Take Profit/Stop Loss (TP/SL) order to protect your account from crypto volatility. Risk management is crucial, and ignorance in this area could cause liquidation and result in substantial loss in any adverse scenario. 

Buy AR on Bybit now!

Closing Thoughts

To sum up, the Arweave blockchain is a permanent data storage solution on track to eliminate many pressing issues in decentralized storage. With their innovative technology, Arweave solves the storage limitation issue while also tackling scalability. It also offers developers indefinite storage to build DApps and earn additional rewards for managing the network. Additionally, with amazing partnerships and the inclusion of NFTs, the Arweave network is poised to reach new heights soon.