What is Arweave? (AR)
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Arweave is a software that seeks to store files permanently across a distributed network of computers. Its goal is to build something not unlike the fabled Library of Alexandria: a digital archive that persists in perpetuity.
As such, Arweave has much in common with other decentralized storage platforms like Filecoin and Sia, both of which also use cryptocurrencies to create marketplaces for users who want to buy and sell data storage services.
Like these ambitious protocols, Aarweave, too, is seeking to disrupt a market dominated by existing storage giants like Google, Amazon and Microsoft.
However, what sets Arweave apart from competitors is its commitment to permanently storing data through unique incentives built around its AR cryptocurrency.
Arweave’s design means that it should, in theory, enable people who store data to receive revenues, even after initial payments for its decentralized storage service are made.
Further, files stored on Arweave are accessible through traditional web browsers, meaning they don’t require any special wallet or blockchain service. Other notable features in development include a voting mechanism that allow its users to moderate illicit content.
As of 2020, Arweave has already begun storing data from the Internet Archive in a partnership that it hopes will help keep that storied institution’s data resistant from tampering.
To follow all the latest updates from Arweave, bookmark its Medium page here.
Who created Arweave?
Arweave was originally named Archain in 2017, but it rebranded in 2018 when the Arweave team was accepted to participate in the startup accelerator Techstars.
Arweave then raised $5 million in 2019 from noted venture capital firms including Andreessen Horowitz and Union Square Ventures.
In March 2020, Arweave announced an additional $8.3 million in funding to be spent on growing the community of users and developers building on Arweave.
How does Arweave work?
Arweave is not exactly a blockchain. Instead of a chain of blocks that contains transactions and data, the typical design for most cryptocurrencies, Arweave stores its data in a graph of blocks.
This means each block is linked to two earlier blocks in Arweave, forming a structure called a “blockweave.” This is in contrast to Bitcoin, where blocks are linked in order, forming a chain.
(Other cryptocurrencies that use a graph structure include Hedera Hashgraph.)
Proof of Access Consensus
Areweave’s design also means that the way it checks the accuracy of transactions is different than most cryptocurrencies.
Where Bitcoin asks computers on its network to compete to solve a mathematical puzzle — a process called proof-of-work — Arweave uses a different mechanism called “proof-of-access.”
In short, Arweave requires each computer taking part in the network to check that a new bundle of transactions also contains a randomly selected marker from an earlier bundle.
If that marker is present, then the new transactions can be added to the network. The computer that adds a new bundle is given a reward in the form of AR cryptocurrency.
Proof-of-access helps ensure that computers on the Arweave network can verify that all new transactions are accurate and that old transactions haven’t been tampered with.
Another feature of the Arweave network is the ability for anyone running the software to choose the type of data they wish to store. This process is known as content moderation in Arweave.
Put simply, computers on the network can decide what types of content they want to host.
Perhaps they want to only host audio files and not images. As new content is uploaded to the network, Arweave will ask each computer whether it will accept the data.
Still, there are incentives for performing more intensive data storage, as users who do will be rewarded by a greater percentage of transaction fees.
Why does AR have value?
AR is the currency of the Arweave network.
Users who wish to store data must buy AR to pay for distributed data storage, and computers on the network that provide storage services must accept payment in AR tokens.
Of note for investors is that the number of AR tokens in circulation is limited to 66 million units. The first tranche of AR cryptocurrency was created in June 2018 when Arweave was launched. At that time, 55 million AR tokens were created.
An additional 11 million AR tokens are scheduled to be gradually released to the computers performing storage services on the network.
Notably, payments on the network are calculated with the assumption that storage costs will keep falling over time. As a result, paying for storage on the Arweave network is like paying a one-time, upfront fee for permanent data storage.
Like other blockchain data storage schemes, AR payments go to the computers on the Arweave network who provide storage services. However, the payments aren’t paid directly to each user. Instead, they are pooled and distributed gradually over time to the computers.
This pool of fees is known as the Storage Endowment. Like other types of endowments, it aims to generate returns from the pool of capital invested with it.
The pool of fees paid by users for storage gains in value over time, like cash in a bank account accumulating interest. Because this pool gains in value, it is able to make regular payouts to the computers performing storage over a number of years.
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Why use AR?
You may find Arweave of interest if you believe the web is overly reliant on centralized services like Amazon, Google, Microsoft or Alibaba for storage.
Further, you may want to use Arweave if you believe in its particular vision for this future.
As opposed to competitors such as Filecoin and Sia, Arweave is focused on permanent storage. This means the AR token may be of interest if you believe digital data requires storage forever, similar to a traditional museum or library.
Computer operators, as well, may find it an attractive way to sell storage space and earn money by contributing to a better, more permanent web.