Factom is a decentralized open-sourced data integrity protocol aimed to solve real-world business problems through the introduction of an unalterable record-keeping system. The creation of a data layer on top of the blockchain helps the distributed ledger technology to secure millions of real-time records with a hash. Factom offers a very convenient method of documenting information without the possibility of its further deletion or modification.
Decentralized record-keeping technology offered by the platform delivers transparency and user privacy simultaneously. The technology gives the power of Bitcoin blockchain to an unlimited range of applications and users. The team released its protocol on an open-source basis in 2018. The mission of the company is to provide assistance to businesses and governments to keep records and manage data securely.
The project was launched by a blockchain innovations company Factom, Inc. in 2014. The company itself is headquartered in Austin, Texas, USA, but also operates from different countries all around the world. It has offices in Shanghai, Beijing, Honduras, London and Sunnyvale, California.
The lack of trust decreases efficiency in a global economy, and Factom tries to solve this problem providing the precise, verifiable, and immutable audit trail to place instead of blind faith. Neither the records which people used in the past nor the computers are effective enough for data protection. Blockchain technology is a good solution to the problem as it makes data verifiable and independently auditable providing the highest level of security.
Factom has created a distributed autonomous protocol by extending Bitcoin’s feature set to record events outside of monetary transfers. In this way, Factom gives businesses and organizations access to the blockchain technology without getting bogged down in currencies.
Factom has designed a solution to secure sensitive financial and personal information protecting it with a hash technology. A hash means a cryptographic one-way function that transforms digital data turning it into an alphanumeric string that can’t be changed. Factom technology makes hashes via API transforming them into a single hash that is anchored to Bitcoin’s blockchain as an immutable time stamp.
The hashing algorithm splits the sensitive data into fragments with further distribution across different blockchains for a higher level of security. The encrypted data is stored in separate blockchain data vaults. Such an approach has proved to be highly secure.
Factom resembles BitTorrent technology. An entry block is made by hashing together many small 10KB files. Then they are hashed and indexed into the directory blocks, which are anchored to Bitcoin blockchain creating 10 blocks every 10 minutes during BTC mining. It helps to create an effective sidechain solution with a minimum amount of data required for each block. The data is packaged so that it can be shared on a P2P network.
Factom uses three kinds of proofs to ensure verification of documents: Proof of Existence, Proof of Process and Proof of Audit. The network of Federated servers is employed for the collection, packaging, and securing of data in the Bitcoin blockchain. Each server can only control part of the system but doesn’t have control over the entire system.
Factom ICO and other details
All fundraising efforts made by Factom were quite successful. The company raised 1.1 million USD in a crowd sale in 2015 and a little later 400,000 USD in seed funding. In October 2016, Factom raised 4,2 million USD, followed by 8 million USD in April 2017 and 6 million USD in August 2018.
It’s worth noting that Factom is architected in such a way that users don’t need any coins to use the platform. Two separate tokens are powering the network: Factoids (FCT) and Entry Credits (ECs). Operating on their own chain within Factom, Factoids are needed to upload data to the network. They can be stored on Factom Enterprise Wallet, which is available for Mac, Windows, and Linux, or Papermill paper wallet and can be downloaded from the Factom website. There is an opportunity to select a Secure (encrypted) or Not Secure (unencrypted) wallet.
The Factoid supply is unlimited. This coin is not mined, but earned by Federated Servers, acting as the communication channel between other nodes, which are named Audit Servers and Follower Servers, and the blockchain.
FCT is traded on such exchanges as Bittrex, Upbit, Cointree, Poloniex, and BCEX. Factoids are paid as a reward to servers maintaining the network. The platform releases 73,000 FCT per month. The issued number doesn’t depend upon the price. Entry Credits are used to pay for Entries (adding data to the protocol) or to vote for Federated servers. Also, used Entry Credits can’t leave the system. Though ECs don’t have intrinsic value, the addition of data to the Factom blockchain is impossible without them. This cryptocurrency was made non-transferrable to make them less attractive for hackers. Factoids are needed to buy Entry Credits. After Entry Credits are used, Factoids, which were used for their purchase, are burnt.
Factom team and partners
The head of the platform, Paul Snow, CEO, is one of those who invented the patent used by Factom. He is also simultaneously the head of the Texas Bitcoin Association. The list of other inventors includes Mahesh Paolini-Subramanya, the former EVP of engineering who worked for the company until the patent application was submitted, and Brian Deery, the chief scientist of Factom.
The company was first became known in 2014 after integration into the Microsoft Azure platform. It brought increased publicity to the company, while its token rose by 600% in value. In 2015, Factom partnered with the government of Honduras on a land title registry project where the company offered a secure land title record system. In 2016, Factom entered the partnership with the Chinese government, securing a smart city deal. In November 2016 it received two grants from Bill & Melinda Gates Foundation for a prototype of a digitized medical record system for individuals living in remote developing areas of the world. In June 2018, the U.S. Department of Homeland Security has awarded a grant to Factom, delivered for support of beta testing of a platform working to secure data from Border Patrol cameras and sensors.