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What Is Factom Coin? A Comprehensive Guide
We live in an era where manipulating information and data is commonplace and the accuracy of news is questionable. What can be done to ensure the flawless verification of content? How can we be sure that our data won’t suffer manipulation? This is where Factom comes into play. Let’s take a closer look at this unique coin and all that it has to offer.
About Factom (FCT)
Factom is a system developed to reside on top of blockchain networks like Bitcoin and other cryptocurrencies. It behaves as an unalterable and permanent directory and offers a way to store data through verifiable methods. Factom does not continuously add blocks to the networks on which they reside if it is not designed as such. This is due to the fact that Factom stores data on the blockchain in hashes.
That means that Factom can validate and secure millions of transactions in real-time via its completely transparent database. Information from anywhere in the world can be used as a comparison to that on the blockchain for verification purposes. The final result is a completely transparent system that retains the advantages that a decentralized blockchain has to offer.
Based in Austin, Texas, in the United States, Factom develops applications which make use of blockchain technology. You’ll find products made by Factom in a wide variety of industries for functions such as improving data integrity or auditing purposes.
Founders and Team
David Johnston and Paul Snow are the brains behind Factom. However, Peter Kirby currently serves are the president of the company while Paul Snow resides as the CEO. David Johnston is the chairman of the board. Brian Deery joins the team as its chief scientist as well.
The Factom team released its first white paper on November 17, 2014, and soon followed it with the launch of Factom version 0.1, which was released on January 25, 2015. Once the team had the base security for the blockchain in place, they started their presale for the tokens.
In June 2016, Factom was rewarded with a project for the U.S. Department of Home Security. The project has also provided its services to the Honduran government by creating a secure land deed registry solution. From that point forward, the country has had Factom’s solution in place to prevent land title fraud.
Factom had its ICO on March 31, 2015. During its initial trading day, the coin sold more than one million tokens. One item of note during the ICO was the Factom only accepted Bitcoin as a method of payment.
Something interesting to note was that the Bitcoins for the purpose of purchasing Factom were released in three separate batches of 33 percent each. The first batch was released when the first milestone was released, which was the case for the second batch as well. Similarly, the third batch was released when the third milestone was realized.
During its ICO, Factom brought in $1.1 million, which at the time was the equivalent of 2,278 BTC. This amount was raised by over three hundred different investors.
How Does it Work?
Some find that the underlying mechanism driving Factom is complicated or complex. To help make things a little easier to understand, let’s talk about exactly what hashing is.
To keep things simple, a Hash is a tool that turns on the conversion of a video or document, for example, into a fixed string recognizable by a computer. The output you should get as a result is a unique identifier based on the data which was converted. Factom uses the SHA-256 hashing algorithm in an effort to streamline its process.
Something easy to compare hashing to would be a unique fingerprint. The identifier obtained cannot be altered and is permanent. Additionally, hashes are combined to form a single hash, which is then anchored to the Bitcoin blockchain.
The created hash stays on the blockchain. Whenever someone wants to validate information, they hash it and then perform a comparison with the hash that exists on the blockchain. If the original hash and the newly created hash don’t match up, then you know the data has been tampered with. At the same time, if they do match, then the data is accurate.
Operating on the Factom system are certain checks which ensure that the platform is running as smoothly as possible. Factom refers to these checks as “Proofs” which are defined as the following:
- Proof of Existence – When a firm signs on with Factom, the data they provide is hashed. Factom combines these hashes into one has which gives the data a timestamp and places it on the blockchain. As more hashes are added every ten minutes, the blockchain is confirming that the data existed at a given time.
- Proof of Audit – Factom is based on the Bitcoin blockchain, which means the hashes which reside on the network can be audited at any time.
- Proof of Process – This is basically the process through which entries are placed and validated on the blockchain itself.
In order for a cryptocurrency to have value, it’s imperative that it provides real-world use cases. There is a need for secure and efficient data storage and validation in several industries. Here are a few examples of ways Factom can be used:
- Healthcare information – This is a great market for data validation and confirmation since it contains a lot of information on a regular basis. Factom provides a valid solution to manage data storage and verification.
- Mortgage Data – Banks keep mortgage information for millions of clients and Factom can help manage this data efficiently. Traditional methods are bulky and slow. By comparison, Factom is fast, cheap, and secured on the blockchain.
- Legal Applications – Some legal documents require notarization but don’t have a way to prove that the proper parties signed certain documents. Factom will help to ensure that signed documents are authentic and cannot be manipulated.
As you can see, any industry that keeps customer data, or any data for that matter, could benefit from using Factom and its data storage solutions.
Products and Applications
One example of the products that Factom offers is its Harmony application. This solution specializes in document management and relies on blockchain technologies. The Factom Harmony application is ideal for the mortgage industry.
A second application available with Factom is its dLoc by SMARTRAC. This is a great solution for validating important documentation like land deeds or birth certificates. Another application Factom offers it an Anti-Corruption tool, which the company is working on with Bitsapphire. This tool helps resolve common land registry problems in Kosovo.
If you’re an artist or musician and you want to protect your intellectual property (IP), then you might consider using Peertracks. This Factom API gives anyone the ability to crosscheck their content and verify that it does not violate any other musician’s intellectual property.
One last solution Factom offers is its Hera product. With Hera, business owners can scale their data security needs in a way that fits their growth. This helps to ensure that your cost for security doesn’t outgrow your data and systems requirements.
Before we get too much further into the Factom platform, it’s important to know that Factom uses two different tokens.
Factoids are the primary tokens you’ll use with Factom and are synonymous with the coin itself. This token has its own chain in Factom and you can trade it with other digital currencies. The Factom network remains decentralized through its supply of FCT. Using FCT also prevents the network from getting spammed while those that support servers receive coins as a reward for their help with maintaining the Factom network.
Entry Credits (ECs)
Users can buy Entry Credits with Factoids via the Factom protocol. Entry Credits are non-transferable which means they serve as a method of payment for voting and entries for Federates servers. Because Entry Credits don’t have a very high value, they don’t have the same draw for hackers that FCT offers. Therefore, Entry Credits don’t typically have a need for very secure storage options.
Factom is not mined in the same way traditional cryptocurrencies are since it’s built on top of the Bitcoin blockchain. Factom’s data resides on the Bitcoin network and unlike the first cryptocurrency, Factom’s core purpose isn’t as a currency or payment solution.
There are 32 federated servers on the Factom network which control transaction processing. These servers behave as mining pools in that they order transactions on the network itself while building the blockchain.
The nodes that become federated servers are selected based on a vote by the largest users of Entry Credits. This means that transaction ordering servers can have enough advance knowledge which helps to improve response times and makes the system more efficient.
Factom keeps 32 Audit Servers in reserve in the events that it needs to replace the 32 Federated servers. If massive failures occur, these backup servers can jump in and take over in real-time.
While most projects create a linear roadmap that follows the calendar in chronological order, however, users can track Factom’s progress through its use of milestones. As of the time this article was written, the following milestones have been realized:
The first milestone centered on building a blockchain utilizing the genesis block. It would also focus on coupling the block with Factom’s centralized protocol software. In addition, the project had to establish servers and take the necessary steps to ensure that the platform was up and running smoothly.
This milestone primarily focused on getting the consensus algorithm setup. The second milestone was key since it is how Factom gets its capabilities for processing purposes.
The goal of the third milestone was to ensure that 32 servers were set up and ready to go for both federated and auditing scenarios. These are to ensure that Factom remains in line with the idea of decentralization as it relates to cryptocurrency. This third milestone was important in that it ensures long-term platform stability.
Factom has a strong community through a variety of mediums (including Medium) that supports the project. For example, the Factom Twitter handle, @factom, has almost 76,000 followers. It’s Reddit network, which is a popular landing spot for those interested in technology, has nearly 8,000 readers.
Facom has featured articles on Medium.com, which helps users understand the network and how the project is progressing. It also has a listing on CoinMarketCap and is the 68th ranked cryptocurrency based on market capitalization.
While there aren’t currently any methods to purchase Factom with fiat currencies, there are several crypto exchanges available that allow you to trade FCT with either BTC or ETH. While we don’t necessarily endorse the following exchanges, they do provide you with a way to access Factom.
Cryptopia, for example, is a small cryptocurrency exchange based in New Zealand. You can use Bitcoin as a base trading pair if you want to use this exchange as a way to procure FCT. Bit-Z is also a crypto exchange on which you can trade for FCT. Just like Cryptopia, FCT is being traded as one market pair with BTC as one base currency.
A third option you can look into is the Bittrex exchange. This popular exchange is great for those new to cryptocurrency and is an option to trade BTC or ETH for FCT. These two base currencies give you a little more in the way of options (although not by much) if you prefer not to use Bitcoin.
You can also use ShapeShift to get Factom, although just keep in mind that you have to use Bitcoin or other altcoins as the exchange does not allow for purchasing crypto with fiat currencies.
We’ve mentioned repeatedly throughout our coin and exchange reviews, however, we’ll say it again: it is important that you keep your digital assets in a safe place. These assets are a valuable and easy target for hackers.
Here are a few options when it comes to keeping your coins safe.
Factoid Papermill offers an FCT wallet that effectively and securely stores your Factoids. The Papermill creates both private and public Factoid key addresses. This wallet works with Linux, Mac, and Windows operating systems.
Using a desktop wallet is another way you can securely store your FCT. You can get your Factom wallet in the documents section of the official website. If you’ve never installed a desktop wallet, Factom offers an official step-by-step guide to walk you through the process. You can use the Factom Enterprise wallet on Linux, Mac, and Windows operating systems.
Pros and Cons
- If Factom is successful in what it hopes to attain, it could become an all-encompassing protocol layer for a world that continues moving toward complete digitization.
- Factom established a partnership with SoftStone in 2018, which allows for integration into smart city and blockchain tech solutions. The project also has relationships with Ancun, Rongdu Technology, DataYes, and Intrinio.
- The project was awarded a $500,000 grant from the Bill & Melinda Gates Foundation in November 2016. They were tasked with building a Proof of Concept medical system for residents in remote or developing areas of the earth.
- Continuing to develop its protocol so that it will have the ability to support multiple blockchains, which would include both Ethereum and Bitcoin.
- Factom has the ability to function on multiple servers, which allows for the execution of the protocol across several platforms, which helps to make the solution decentralized.
- No risk of hacking since it’s not a typical digital currency.
- Fatcom uses Bitcoin, arguably the most trusted blockchain, to verify its databases.
- Backed by the Coinsilium global blockchain accelerator.
- Factom is not a true currency like ZCash or Bitcoin, so those interested in the project may become confused.
- Isn’t as involved on social media as other higher ranking cryptocurrencies.
- Not considered a well-known or “exciting” cryptocurrency.
- Unfortunately, Factom might be ahead of its time as most of the world doesn’t yet know about its capabilities.
Factom is changing how companies and entire markets are storing and protecting their data and records. We only have to look at large companies like Target, Sony, and Wells Fargo to see just how frequent hacks are occurring. This means protecting and securing data is an increasingly important area on which we need to focus our efforts.
Moving toward a decentralized database and the blockchain and away from centralization helps companies keep their records secure and safe without any of the risk. Using cryptocurrency means businesses will have complete and total control over any records which are hashed into their systems.
Factom is committed to creating and developing successful solutions that help their clients. They want to make record storage safer than it currently is and wants businesses to recognize how revolutionary the practice of storing information on the blockchain truly is.
Using Factom as a way to store and record data could significantly reduce the chances that our identity records or financial information could be hacked. This means we could see a significant reduction in corruption and fraud in the near future. We may also be impacted by health record documentation or voting systems as a means to wipe out data manipulation with Factom.
We think that Factom is a project with a lot of potential along with many real-world use cases. There are many significant problems that Factom could address in regards to trust, data, manipulation, and immutability. We’ll definitely be keeping an eye on Factom in the near-term as it continues to provide valuable solutions that provide valid answers to real-world problems.
Deep dive into Factom by reading the white paper.