Arweave (AR): Platform for Enhanced Data Storage
June 23, 2022 at 4:00 am
by Dmytro Kharkov
Arweave, a platform that aims to provide users with the almost indefinite storage opportunities for different types of data, integrates community-oriented apps and platforms in a user-friendly manner.
What Is Arweave?
The rapid expansion of blockchain applications and the global cryptocurrency network has posed new challenges in terms of data storage that should allow accessing almost any relevant information at any moment. Arweave offers the “permaweb” that theoretically should contribute to the indefinite data storage through the application of the decentralized system. In particular, the network offers its native tokens AR to “miners” to create additional incentives to store respective information and data for the maximum possible period. As long as the market value of AR tokens being above the marginal costs of data storage, such an approach can work successfully. Arweave has implemented an innovative blockchain solution that links every block both to the previous one and one more random block. In this way, the data appears to be better distributed and more effectively protected in a decentralized manner.
AR’s price equals $10.23 with the circulating supply of 33.4 million tokens. Thus, its current market capitalization is about $341.5 million, making it the 92nd largest cryptocurrency at the moment. As its maximum supply is 66 million, about 50% of the total supply will be issued in the following several years. AR reached the historical maximum of its capitalization in May of 2021 with the price above $86, following by the rapid decline in the subsequent months. The token has been significantly affected by the recent collapse, although it still demonstrates some ability to recover and gradually restore its market positions.
Figure 1. Arweave’s Promotion Poster. Data Source – ByBit Learn
Investing in AR: Pros and Cons
The long-term AR potential depends on the dynamics of the overall market demand for decentralized storage services as well as the platform’s ability to maintain the maximum cost-effectiveness. While the demand for data storage may continue to increase rapidly in the following years, the competition in the segment may also increase proportionally. The integration of graph theory innovations and neural network solutions may allow Arweave to receive additional competitive advantages, although its competitors may also offer additional functionality to users as well as combine traditional data storage with complementary services. Overall, the long-term investments in AR should be made exclusively after the proper evaluation of the major fundamental factors and industry trends.
Figure 2. AR/USD Price Dynamics. Data Source – CoinMarketCap
AR major support level corresponds to the price of $8 with the major resistance level being at $20. Moreover, the current price dynamics still develops within the downward sloping channel, indicating that bearish sentiments still prevail in regards to this altcoin. In order to effectively reverse the current negative trend, the following two conditions should be met. First, the AR price should break the current channel upwards. Second, the price should exceed the important level of $20. In this manner, bulls will receive the require impulse for supporting a new wave of growth. Until these conditions are met, any investments in AR are associated with disproportionally high risks.