Arweave (AR +2.39%) is a Web3 protocol that offers data storage on a decentralized network of devices. Like other storage coin projects, it matches people who need storage with users who have extra space available. There's one big difference between Arweave and the competition, though, which is that Arweave claims to offer permanent storage for a single up-front fee.
Storage is always needed, and Arweave's permanent storage is an intriguing selling point, although it technically guarantees 200 years of storage. It's also already in use and working with the Internet Archive to back up data collections. Considering how much potential Arweave has, it's worth understanding how it works.
What makes Arweave unique?
Arweave seeks to provide the world with the "Permaweb," which it defines as a “global, community-owned web that anyone can contribute to or get paid to maintain."
The basic idea behind Arweave is similar to other storage coins, such as Filecoin (FIL -1.37%) and Storj (STORJ -0.68%). All these projects allow anyone to rent out their unused hard drive space. While traditional storage providers operate data centers, storage coins create decentralized storage networks.
Most storage providers, including storage coin projects, charge monthly or yearly fees. Arweave turns the model on its head by charging one up-front fee for permanent storage. Storage on Arweave is paid for using the protocol's AR tokens.
The obvious question here is how a service can provide storage indefinitely for a single fee. Arweave's solution is a sustainable endowment. Most of its storage fees are deposited into this endowment, which grows by earning interest. Arweave pays future storage costs using the interest generated by the endowment.
However, there is fine print to the storage contract. Arweave guarantees to store data for at least 200 years or as long as the endowment has enough value. If its calculations are accurate, then it should be able to store data permanently. It guarantees 200 years because that's a conservative estimate.
Where Arweave came from
Sam Williams and William Jones co-founded Arweave while working on their doctoral degrees at the University of Kent. According to Williams, he thought of the idea while walking up a mountain in Scotland and brought it to Jones, who helped him with the technical details. They founded a technology company for the project, which was originally called Archain, on June 28, 2017.
The name was changed to Arweave a year later, and the Arweave mainnet launched in June 2018. Williams serves as the CEO. Rounding out the team are CTO Jesper Noehr and COO Sebastian Campos Groth.
Arweave's seed investors included heavyweights Coinbase Ventures and Andreessen Horowitz. There was also a public coin offering in 2020. Arweave operates a decentralized autonomous network (DAO) to incorporate community voting and decision-making.
Is Arweave a good investment?
Arweave has potential as a cryptocurrency investment. It has a well-defined use case, provides a unique service, and the number of partnerships it has established are a good sign since it shows what other organizations think of this storage coin.
To temper expectations, Arweave is still a high-risk project that's currently in the early stages. Permanent storage is a useful service, but it's one thing to promise it and another to deliver it. Arweave could run into unforeseen issues down the road as the amount of data it's storing grows.
It's also worth mentioning that Arweave's usability isn't the best. If you want to use it to store data, first you will need to use an Arweave-compatible blockchain wallet, find an exchange that sells AR tokens, buy some, and send them to your Arweave wallet. There is "how-to" documentation, but it requires several steps and potentially a new wallet and/or a new exchange.
Arweave wallet use will become simpler soon because a Metamask wallet "snap-in" extension for Arweave ("ArSnap") is under development -- but it's not released yet. By comparison, Arweave competitor Storj has a much more beginner-friendly interface and accepts credit card payments, so it's easier to use.
When you're investing in cryptocurrency, it's always good to take a measured approach. Arweave certainly has potential and could be a winner. At the same time, there are risks with every cryptocurrency, and Arweave is no exception. Investors should only put in money they can afford to lose and be prepared for price volatility.
How to buy Arweave
Buying options for Arweave are limited, at least if you're in the United States. Most of the major U.S. crypto exchanges haven't listed this cryptocurrency yet. Fortunately, there are a couple of places where U.S. investors can buy Arweave:
Internationally, Arweave is offered by Binance, KuCoin, Huobi Global, and Gate.io.
Although there are several storage coins on the market, Arweave is one of the most interesting. Its permanent storage and permaweb are both unique advantages that set Arweave apart. If you believe decentralized storage is the future, then this cryptocurrency could be worth buying or at least keeping an eye on.
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