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What is Factom? An In-depth Beginner’s Guide to the Factom Cryptocurrency

Factom refers to a blockchain-based digital currency platform fixated on bringing about data integrity. Notably, it is among the most compelling cryptocurrency projects available so far.

Before we jump into the technical aspects of the project, it is worth noting that as from its inception, Factom has risen at a +12,000 percent rate and is still going strong.

Having mentioned that, let’s begin by looking into what Factom really is and the way it operates.

What is Factom?

Factom has been existent in the cryptocurrency space for quite a bit of time, given that it was launched way back in the last quarter of 2014.

Basically, Factom is an open-source data layer protocol built atop Bitcoin. The platform makes it possible for not only businesses but individuals as well to build applications on top of Bitcoin’s blockchain.

You are most probably pondering over how possible it is to develop an application on top of Bitcoin. Well, later in this post, we will delve into how this comes into being. But in the meantime, look at it from this point of view:

Bitcoin’s blockchain, from a structural point of view, comprises of elemental constraints which do not leave plenty of scope in so far as innovative solutions go. Be that as it may, over the recent eight years, the blockchain has demonstrated it is beyond doubt the most trustworthy and immutable record of monetary transactions ever devised.

Most significantly, Factom was structured to leverage the blockchain’s (Bitcoin’s Blockchain) security and immutability. The moment an entry is recorded on the Factom blockchain, it becomes a permanent record and can’t as such be in whatsoever way be edited, hence immutability. This, as a result, serves as a trustable record against which any copy is verifiable and original records are kept secure.

The organization, Factom, Inc., is a blockchain tech company based in Austin whose primary objective is to offer blockchain data provenance for complex industries. The company’s specialization regards coming up with scalable blockchain technology to manage complex enterprise data and volume.

With such clients as the Bill and Melinda Gates Foundation and the United States Department of Homeland Security, the organization is the dominant leader in so far as providing blockchain-based solutions aimed at preserving, ascertaining, and validating digital assets goes.

The FCT (Factoids) Token.

Factoids are the inherent digital currency tokens used for transactions on the Factom platform. These tokens are retained on the platform’s blockchain network and, like any other crypto tokens, they are tradable in cryptocurrency exchanges. The FCT token serves as the fuel that makes it possible for users interacting with the platform to carry out data entries. These tokens are responsible for securing data by creating a link between them and Bitcoin’s blockchain.

FCT Total Supply

At the time of composing this post, the total FCT supply is 9,392,090 FCT. Nonetheless at the time of the ICO, there were more. The coin’s ICO commenced on 31 March, 2015, and the stakeholders saw to it that it was funded with 2,278 worth of BTCs. This, as a result, led the creation of 8,759,968 worth of Factoids (FCT). Out of this, 6749 FCT have thus far been burned.

The total supply of the coin is yet to be capped, and following an annual technical release (M3), 73,000 worth of FCT is scheduled for issue every month.

How does Factom Work?

Factom’s operation is based on the “hash technology”. So, what’s a hash?

A hash is basically a one-way cryptographic function that changes any digital artifact, being inclusive of audios, videos, or documents, into a fixed string of alphanumeric characters. The generated string can be likened to a digital fingerprint print of the artifact in question. Most significantly, it is not possible to access the artifact by reverse engineering the digital fingerprint, just as it is impossible use a thumbprint to create a real human thumb.

The technology makes it possible to create hashes of digital artifacts via an API. These hashes undergo collation after which they are again transformed into a single hash. The single hash is then anchored to Bitcoin’s blockchain which serves as a timestamping machine that is impossible to roll back.

The original hash can in the future be utilized for comparison purposes. Anyone is in a position to use an artifact and hash it, and then collate it against the original hash. In the event there is a match between both hashes, then it means the artifact is original and hasn’t been interfered with. If, on the other hand, there is not a match, then it means the document/artifact has in a way or another been tampered with.

Factom implements the SHA-256 cryptographic hash algorithm to generate such digital fingerprints. Elementally, Factom accomplishes the latter by providing 3 proofs that are responsible for ascertaining that the system is working as it should. The 3 proofs are:

  • Proof of Existence
  • Proof of Process
  • Proof of Audit

Proof of Existence

Upon associating with Factom, be it an individual or an organization, users are allowed to generate hashes of their digital artifacts. The hashes that have undergone collation are once again converted into a single hash which is as result time stamped and anchored into Bitcoin’s blockchain. To make sure that an artifact existed at a particular point in time, it is added into Bitcoin’s blockchain every ten minutes. This is what is referred to as “Proof of Existence.”

Proof of Process

Factom authenticates and records entries in their entirety in its blockchain. The manner in which this is attained, the processes herein involved, and the order are as well recorded so as to alleviate the possibility of double spending of money. This is what is referred to as “Proof of Process.”

Proof of Audit

Eventually, given that the generated hash is anchored to Bitcoin’s blockchain, unless the blockchain is shut down, it can as such be reproduced whenever for auditing purposes. This is what is referred to as “Proof of Audit.”

These proofs ensure there is assuredness and transparency in record keeping. Most significantly, it is for these reasons the project was named “Factom” – a Latin word implying, “Anything stated and ascertained.”

Factom’s Data Entry Process

In order to prevent spam of data, Factom charges its users some fees for entering data into their blockchain. In this regard, Factom incorporates other software tokens referred to as Entry Credits (EC) which are non-transferable and can be bought in an exchange in Factoids (FTC).

The main reason for including additional tokens is to come up with a fixed price per KB stored on the blockchain as well as to alleviate the complexity that comes with using a direct digital currency like FCT for Factom users.

Both the FCT and EC tokens are burned in the process, and they can neither be recycled nor reproduced.

Factom’s Token Supply and Market Cap

As of the time of writing this post, Factom’s circulating supply is valued at 9,392,090 FCT and its current price per unit is $6.19 USD. This as a result values its market capitalization at just about $58,178,533 USD.

How to Purchase Factom (FCT)

Buying FCT from ShapeShift

One of the simplest ways to obtain your first FCT is to get it exchanged from the ShapeShift exchange.

You will be required to have the following items in order to carry out the purchase:

  1. A Factom address. This is where your FCTs will be deposited.
  2. BTC or other crypto coins. It is these coins that will be exchanged for FCT.

At the moment, the exchange (ShapeShift) supports over 50 digital currencies, including FCT.

Buying Factom from Exchanges

Below is a step by step guide on how to purchase FCT from a cryptocurrency exchange:

  • Obtain a Cryptocurrency (BTC/ETH/LTC)

To obtain a crypto coin such as BTC/ETH, exchange your fiat currency for BTC/ETH on a cryptocurrency exchange of your preference.

  • Exchange your Obtained Crypto Coin for FCT (Factoid)

The second step entails exchanging the crypto coins you obtained in step 1 for FCT. Listed in the table below are some of the most reputable cryptocurrency exchange platforms from where you can have your BTC/ETH exchanged for FCT and the various crypto pairs these exchanges support:

Exchange Supported Cryptocurrency Pairs
Bittrex FCT/ETH, FCT/BTC
Cryptopia FCT/BTC
Poloniex FCT/BTC
Upbit FCT/ETH, FCT/BTC
ShapeShift.io

 

Of all the exchanges mentioned above, ShapeShift is the simplest means to obtaining your FCT tokens.

  • Transfer your Crypto Coins from the Exchange to your Factom Wallet

At the moment Factom solely supports desktop cryptocurrency wallets on Windows, Linux, and Mac platforms. Their own tailor-made desktop wallet, which is GUI wallet, is referred to as the Factom Enterprise Wallet. To download the wallet’s latest version, visit this link. The wallet can be used both online and locally. You may be required to wait for the wallet to synchronize with the blockchain as it may take a bit of time.

Factom Wallets

Currently, the number of wallet options available for storing FCT tokens are barely a handful. Significantly, Factom is as well in the pipeline of two renowned multi-currency wallets, Jaxx and Exodus. Be that as it may, for early adopters, the wallet options are adequately available.

With that in mind, below is a list of wallet options so far available in the marketplace for holding FCT:

  • Desktop Wallet:

Factom, as earlier mentioned, has its own desktop wallet referred to as the Factom Enterprise Wallet. The wallet is available on Mac, Windows, and Linux platforms.

  • Paper Wallet:

For users who prefer using paper wallets, there is the option of creating one. Notably, with this option, it is not possible to download its traditional printable version. With it, however, users are in a position to generate both private and public factoid addresses.

  • Exchanges:

You can hold FCT tokens at various exchange platforms but the most recommended ones are Poloniex and Bittrex. Nonetheless, holding your crypto assets on exchanges for long is highly disregarded as on these exchanges your funds are not only exposed to possible hacks, but can as well get lost in the event the exchange, say, gets shut down. For trading purposes, however, it is recommended that you should hold your crypto assets on the exchange for at most two days.

Factom Products and Use Cases

Factom technology is a cost-effective approach to separating the Bitcoin blockchain from the BTC tokens and incorporate it in other applications. In this regard, Factom utilizes Bitcoin’s blockchain for transactions not involving Bitcoin and opens up a vast range of real-world use cases.

Listed below are possible use cases of Factom:

  • Service Level Agreement (SLA) Logs
  • Immutable Audits
  • Journaling Applications
  • Property Titles
  • Medical Records
  • Legal Applications
  • Voting Systems

On the basis of the use cases mentioned above, Factom thus far has a number of products, some of which are already operational and others still under development. Listed below are a number of these products:

  • Factom IrisThis is a tool for tracking valid identity and ownership of IoT things.
  • Factom HarmonyAn all-inclusive solution for the mortgage industry.
  • Factom HeraThis is a tool for building private and permissioned blockchains.
  • Factom Apollo This is a tool for auditing databases.
  • Factom dLoc SMARTRAC This tool is responsible for authenticating and verifying documents/products

Factom Team and Progress

The Factom project commenced in 2014 which places it on the older end of the blockchain gamut. The team has since demonstrated steadfast progress.

The organization released its first version of Factom in early 2015 and had their ICO in mid 2015. In August 2015, Factom was accepted into the Plug and Play FinTech accelerator and in May 2016, they were selected as one of Austin’s A-List startups.

The organization’s core team comprises of multiple members with several years of experience in the blockchain realm.

Paul Snow spearheads the team as the organization’s founder and Chief Executive Officer. He as well plays the role of Chief Architect for the open-source project, DTRules. What’s more, he is the founder of the Texas Bitcoin Conference.

At the moment, Factom boasts over eleven million entries as well as a number of noteworthy collaborations. The team is working alongside the United States Department of Homeland Security to provide audit trails for data collected at the United States borders. They are additionally working in collaboration with the Gates Foundation to store medical records for people in third world countries on the blockchain.

In June 2018, a court in the Chinese Republic used data cached with the Factom blockchain as legal evidence. This as a result set an exemplar for prospective cases.

In may 2018, the team finalized their whitepaper’s last crucial milestone, M3. With M3’s implementation, the administrative servers switched from those run by Factom, Inc. to independent operators across 9 nations. In addition, the Factom team made significant advancements on the speed of the blockchain, raising the throughput by 5x and reducing the blockchain’s verification time by a factor of 600. They as well augmented support for the anchors of the Ethereum blockchain.

Factom Competitors

Most noteworthy, Factom, Inc. has barely a handful of direct competitors. NEM, which in 2017 released Apostille’s whitepaper, is Factom’s biggest competitor. Apostille’s area of specialization, just like Factom’s, regards the notarization and timestamping of data and documents.

Factom Partnerships

As earlier mentioned, Factom at the moment works in collaboration with the United States Department of Homeland Security to generate audit trails for data collected at the US borders. The Gates Foundation also works in partnership with the Factom team to build a prototype that stores medical records for people living in developing countries. Also, worth noting is Factom’s partnership with FTP Software which is an IT services organization headquartered in Vietnam. This partnership is intended to foster the development of a blockchain-based system that engenders audit records.

Factom’s Roadmap and Future Updates

Factom instigated its fully decentralized protocol in April 2014. In the last quarter of 2018, the organization updated its Enterprise Wallet to incorporate encryption.

The Factom community is set to accomplish its third milestone (M3), which will majorly entail moving the platform as close to complete decentralization as possible. It has as well resolved to appoint 65 nodes to be at the helm of the platform’s functions.

The project’s future is without doubt solid. This is in light of the fact that the organization has secured several grants and funds from quite a number of individual investors and organizations. Here are a number of remarkable funding events:

  • In July 2015, the organization secured $1 M in crowd sale.
  • In February 2017, Factom received a $200K grant from the United States Department of Homeland Security.
  • In April of 2017, the organization came by $8 million USD in Series A funding.
  • They secured a $500K grant from the Bill and Melinda Gates Foundation.

The Factom team is working tirelessly to fulfill its 3 milestones as indicated in their whitepaper as discussed below:

  • Central Server Model

This milestone was accomplished in September 2015 when Factom’s inaugural servers went live. Despite the fact that the platform was at the time centralized, it still enabled users to build applications upon their protocol.

  • Factom Federation

Factom released the Factom Federation Testnet (FF) Release Candidate 1 (RC1), formerly known as M2, in April 2017. It was released alongside its EC tokens marketplace as well as a consensus mechanism of federated and audit servers. As a matter of fact, it currently is undergoing tests by the QA team and the Factom community at large.

  • Election Protocol

As the project’s last milestone implemented as per Factom’s roadmap, this milestone will comprise of an election mechanism for the election of thirty-two audit servers. It is an exceptional demonstration of true democracy and decentralization as stakeholders with more EC tokens will be in control of these servers.

Conclusion

Debatably, Factom is a somewhat an undervalued digital asset which, though seemingly boring, holds remarkable potential. With a 700% increment in its price since the beginning of 2017, its future shines bright. Thanks to its dual-tiered currency system, the project has great appeal to major organizations. What’s more, given that a majority of its partnerships, though kept on the down-low due to Non-Disclosure Agreements, are in the pipelines, all it takes is verification of adoption by key corporations for Factom to explode.

Talking about Factom’s partnerships, here is what Patrick G. McClain, Senior Vice President of Equator had to say:

“Incorporating Factom’s blockchain tools will support our customers’ compliance obligations. At Equator we are regularly working to improve and advance our default servicing technology, and adding cutting-edge tools like Factom’s Harmony is another example of our continued leadership.”

Chief Operating Officer of Factom, Laurie Pyle, also celebrated the news, stating:

“At Factom we know a practical blockchain solution is needed to specifically deal with complex business data and documents. We look forward to working with Equator, who shares the vision of using blockchain technology to bring transparency and efficiency to the default servicing process.”

Factom Rating

Tech - 8.8
Economics - 8.8
Team - 9.3
Market Opportunities - 8.6
Product - 8.8

8.9

Overall

User Rating: 3.42 ( 3 votes)

About Sherwood Pham

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