Updated: Dec 20, 2019
Factom is an enterprise-grade blockchain protocol, which separates the immutability of blockchain technology from its associated currencies, and allows independent nodes to communicate effectively. It is open-source software that allows and encourages developers from all over the world to create better versions. Factoids (FCT) are Factom tokens, which give users the right to create entry credits (EC) and entries in the Factom blockchain.
This guide will talk about the purpose for which Factom is designed, the team behind it, the way it works and various uses and applications.
What Is Factom Designed For?
Factom is designed to make it cheaper and easier for businesses to store data using blockchain technology. It attempts to solve the three major problems associated with traditional crypto coins, such as Bitcoin. Factom is created to address transaction speed, trading fees, and limitations associated with first-generation blockchains.
It was initially created for businesses where vital data regularly changes hands. For instance, documents such as medical records and land grants require ensured accuracy, as they pass from one person to the next. Factom, by using blockchain tech, offers an immense amount of value to these businesses. Factom is created to do away with the high costs associated with maintaining paper records, and the inherent vulnerabilities of digital storage.
Who Is the Team Behind Factom?
Factom project began in 2014, putting the platform on the other end of the blockchain spectrum. The core team, based out of Austin Texas, has made significant progress since then.
The team consisting of multiple members with a broad range of blockchain experience is led by Paul Snow, who is also Factom’s founder and CEO. Snow serves as the Chief Architect on DTRule, an open-source project, and is also the founder of the Texas Bitcoin Conference.
How Does Factom Work?
Factom works by using two tokens on the platform – Factoids or FCT and Entry Credits or EC. FCT has its chain on the Factom network and is allowed to be traded freely like any other cryptocurrency. FCT coins help in decentralizing the system and preventing users from spamming the network.
EC, on the other hand, is purchased using FCT. These non-transferable credits have a singular purpose of paying for Entries or voting for Authority nodes. FCT is also offered as a reward to Factom servers who help maintain the network. The network releases Factoid rewards at a fixed rate in a process, which is not dependent on the price of FCT.
Each Entry submitted on the Factom chain has a Chan ID, which is used to determine the subgroup that should include the Entry. This means that Chains act as folders and Entries are the sub-folders. Entries with a particular Chain ID is collected in an Entry Block, which is a group of hashes.
It is important to understand that Entry Blocks do not contain actual data, which avoids vulnerabilities. Entry Blocks are grouped into Directory Blocks, which are then anchored to the Bitcoin blockchain.
The consensus algorithm used in Factom is similar to the Raft algorithm. A leader is selected randomly from the pool of Federated Servers after the network reaches consensus, by using the algorithm.
What are Current and Future Applications of Factom?
FCT has numerous uses, some of which have never been heard of before in the crypto industry. For instance, in June 2018, data stored on the Factom blockchain was submitted as legal evidence in a Chinese court, which sets precedent for a future use case.
The coin and the technology behind it have immense potential, which has been witnessed in its numerous growth spurts. This has made the coin a favorable investment tool. Various economic sectors are directly aligned to be influenced positively by this new-age technology. According to software programs and analysts, FCT is expected to have a growth of more than 400% in the coming future.
Factom has over 11 million entries and various notable partnerships. The team is working with the Gates Foundation to create an infrastructure, which would store medical records for people in developing countries. They are also working with the Department of Homeland Security to enable the provision of collecting audit trails, for data present at the U.S. border.
Though Factom is not without its competitors, the team has arduously forged ahead to create a name for itself in the blockchain industry. Its biggest competitor is NEM which, like Factom, specializes in the notarization and time-stamping of data and documents.
FCT is not as saturated as Bitcoin and Ethereum presently and has a long history backing it as a supportive investment.