Things to Consider Before Entering the Bull Cycle — Part 2: Arweave ($AR)
Hey folks, welcome to my second article in a series of different deep dives that go into some different ideas that will hopefully lay the foundations of some potentially lucrative plays out there (and on the other hand, things that might be worth avoiding) before the next bull cycle really goes into full swing. If you’ve missed Part 1: GBTC, coincidentally the day after I published that article, $GBTC printed a nice green candle and has been on an uptrend ever since:
Today I’m going to be talking about altcoins, or one in particular, Arweave ($AR) which has also had a nice recent run-up of more than 30% this past week, but after studying the fundamentals, I believe that it has a lot more potential to grow than that.
What is Arweave?
Straight from their website, “the Arweave network is like Bitcoin, but for data: A permanent and decentralized web inside an open ledger.” The data you store with Arweave is permanent, so that means that unlike any cloud storage provider such as Amazon’s AWS, Google Drive, or Microsoft’s OneDrive, with Arweave you pay a 1-time fee and are able to store your data, once again, permanently. To be clear, there are other different crypto-related data storage solutions such as Filecoin (which we’ll talk more about later), but none that I know of that offer permanent storage solutions for a fixed price and with such a strong emphasis on decentralization.
Utility and Use Cases
Any altcoin needs clear use cases in order to set apart from a simple meme coin. In the case of $AR, on Arweave’s nework all transactions fees are paid in $AR, and $AR is what’s paid to Arweave miners who are helping permanently store the network’s data.
The biggest use case for Arweave to-date has been its partnership with Solana, or more specifically with Solana’s dApp Store. Transactions which are validated on Solana’s blockchain are stored on Arweave, making it censorship resistant, one-and-done, and permanent. Because of this partnership, there’s historically been some correlation with the price of $SOL, which is also why we saw $AR’s price tank along with Solana’s when FTX collapsed last year:
Conversely, one of the reasons why I’m bullish on $AR now is because with the recent revival of $SOL’s token price, I would imagine that $AR’s price action should recover as well.
Circulating Supply = Max Supply
According to both Coingecko and Coinmarketcap, $AR’s circulating supply nearly matches its maximum supply, which is a very good sign:
In other words, there is no vesting schedule, no VCs that are getting huge amount of tokens unlocked in the future, and ultimately less of a chance of getting dumped on in the future. If you’re new to how this works, I highly recommend that you should read my previous article that I’ve written:
Arweave’s Biggest Competitor
I mentioned other online storage solutions before such as OneDrive or Google Drive, but because Arweave is a completely decentralized product, there’s really only one other major comparable market product out there, that’s completely in the blockchain space — Filecoin.
Like Arweave, Filecoin, does offer decentralized storage, yet similar to other centralized cloud services, Filecoin charges ongoing fees in order to have your data stored on Filecoin’s network. According to Coingecko, decentralized storage in general is significantly cheaper than centralized providers, but given significant potential fluctuations with decentralized storage, it was actually really hard to discern how much Filecoin actually costs as it doesn’t appear that there’s a flat rate. In order to get a quote with Filecoin, you first must “Connect with an Expert,” which personally I found quite annoying. This might make sense if you’re a huge institution that needs to store petabytes of data, but it’s quite frankly a pain if you’re just wanting to store a terrabyte or two. (They do however have a ROI calculator for how much profit you can expect to make by being a storage provider.)
To be fair, Arweave also has dynamic pricing but it’s a bit more user friendly for on its site it gives you at least a real time snapshot calculator for how much it would cost. At time of writing, it’s approximately $6.229 for one gigabyte:
Another significant difference is that by comparison, Filecoin has a circulating supply of more than 450 million $FIL tokens, and also does not have a maximum supply. In other words, there’s no guarantee that more and more $FIL tokens won’t be printed in the future that won’t dilute the price. From a dilution perspective, if Filecoin decided to print 450 million $FIL tokens tomorrow, it technically could half the token’s price overnight.
Other things to consider
Costs: Arweave is still pricey especially for the average consumer. If we break down the math a bit, a 2 TB Google Drive plan costs approximately $99.99 a year, meaning that you’d have to hold your data on Google Drive for about 130 years in order for the costs to reach parity.
Low Marketcap: I actually consider this to be a very bullish property of $AR, but it also carries along a significant amount of risk. Low marketcap tokens are much more likely to see huge swings in volatility, however the way that I see it — if $AR’s marketcap was priced the same as $FIL’s, then right now 1 $AR would be more than $30 dollars.
Data Storage Demands will always increase: I’m going to date myself a bit here, but I grew up needing to change out multiple floppy disks just to play King’s Quest 1. Fast forward to 2023, every analysis I’ve read is predicting that our data needs will continue to grow parabolically. It remains to be seen whether or not users will need to store their data permanently, but I’m predicting that most cloud storage data will become decentralized as blockchain technology continues to gain more adoption.
Conclusion
As I’m preparing for this next bull market, the only altcoins that I’m interested in are the ones that have a likelihood of outperforming $BTC or $ETH, and in $AR’s case, I’m speculating that it might have the use cases to do so. Unfortunately over the course of time that it took me to write this article, $AR has already followed a bit of $SOL’s lead and has jumped almost 20% over the last week, but I would imagine that it has a lot of room to grow, just as its use cases will.
Like this article? Be sure to follow me on twitter (https://twitter.com/CryptosWith) to get all my latest updates and if you want to get access to all my draft links or get an idea about what’s next on my docket before I publish, find me on Friend.tech, where I share all that information in my chatroom. And I already have some ideas for future installments of this series, so if you enjoyed it, please subscribe!
Also, looking for a gift for your Crypto-loving/hating friend? Give them a REKT journal to cheer them up!
Disclaimer: And as a final reminder, this is not financial advice and this is for educational and entertainment purposes only. Please as always, do your own research and find what investments are best for you. Cheers everyone!
