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Factom (FCT): Decentralized Data Integrity

Factom (FCT)- Decentralized Data Integrity@2x

Summary

Factom is an enterprise-grade data integrity protocol designed to maintain an immutable and independently verifiable record of data storage. The Factom blockchain leverages decentralized technology to keep transparent public records for businesses. The protocol is largely intended to provide blockchain-based data security solutions for legacy institutions that want to avoid handling cryptocurrencies — a model that is facilitated by Factom’s two-coin economic system.

  1. The Factom Protocol and Enterprise Blockchain Adoption

  2. Technical Structure of the Factom Blockchain

  3. Governance on the Factom Blockchain

  4. The Factom Crypto Model for Blockchain as a Service

  5. Factom Competitors and the Future of the Factom Network

  1. The Factom Protocol and Enterprise Blockchain Adoption

  2. Factom is a data integrity protocol designed to facilitate next generation record systems in an immutable and independently verifiable manner. The Factom protocol leverages blockchain technology to keep transparent public records for businesses. These blockchain-based data records eliminate the need for trusting third parties or disclosing private data. In particular, Factom is targeted toward enterprise blockchain adoption in data-intensive industries — such as real estate, law, and healthcare — that need to regularly store and transfer large amounts of data. To get started with Factom, businesses simply need to create their own data chain on the Factom protocol, and begin writing data to the chain.

    The Factom protocol began initial development as early as 2014 with its Initial Coin Offering (ICO), and later transitioned to a fully decentralized, publicly available version in 2018. It is designed to be a “pure data” blockchain, meaning it has the sole and primary purpose of serving as a provenance-oriented data repository. While it’s theoretically possible to store data on other blockchain networks like Bitcoin, it is often prohibitively slow and costly to do so, since data storage is not the primary objective of Bitcoin or many other blockchain networks. Because of this, they are not built to accommodate large amounts of data.

  3. Technical Structure of the Factom Blockchain

  4. The Factom protocol’s architecture consists of a set of blockchains that are linked together by a unifying directory-layer blockchain. This allows users to build specific applications knowing that the data contained within will be hosted on its own unique data chain while still directly linked to the wider network. Each of these individual chains is structured to facilitate efficient blockchain data provenance with quick storage and retrieval, as well as the ability to link related entries together. With advanced organizational tools, the data hosted on Factom is designed to be quickly accessible, and users need only sync a small portion of the overall Factom blockchain to run their applications.

    Practically any type of data can be contained in each entry. The data is cryptographically hashed for security purposes, and then made publicly available on the Factom blockchain. That’s how the data can be both private and independently verifiable. Factom crypto network nodes maintain no function with the entered data besides storage. For added security, the merkle root of the current Factom block is also published, or “anchored,” into the Bitcoin and Ethereum blockchains. Through this precaution, it’s possible to prove that Factom protocol data has not been altered by comparing the original Factom blockchain with the hashed entries in the Bitcoin and Ethereum blockchains.

    Factom operates as a decentralized, open-source blockchain records network, which means it is permissionless and anyone can read entries, submit entries, or create a private data chain on the main Factom blockchain. The protocol relies on a proprietary consensus algorithm, wherein data entries are submitted to the network, and then a trusted node broadcasts an order confirmation for the entry. Every 10 minutes, the state of consensus on the Factom network is anchored to the Bitcoin and Ethereum blockchains.

  5. Governance on the Factom Blockchain

  6. Factom is governed by a decentralized network of participants with eligibility determined by records of performance and community support. The nodes that comprise the Factom blockchain are operated by individuals or organizations that have applied to become what are  called authority node operators (ANOs) and have been selected by a designated Factom committee. The top ANOs are designated as “federated servers.” “Audit servers” act as alternates to federated servers in the event of a technical failure.

    The responsibility of managing individual chains is rotated among federated servers so as to maintain a degree of fairness and decentralization. Those who have voting rights on the Factom protocol are ANOs, coin holders, and community-elected guides, which are entities tasked with maintaining orderly operation of the Factom protocol.

  7. The Factom Crypto Model for Blockchain as a Service

  8. The Factom protocol employs a two-coin mint-and-burn economic system. First, Factom relies on its own native cryptocurrency, factoids (FCT), to incentivize network participation. The FCT cryptocurrency has an unlimited supply, can be traded externally just like any other cryptocurrency, and is paid out to Factom network nodes as a reward for processing new blocks on the network and their role in keeping the system running. As for internal processes like writing new entries to the Factom blockchain, users must rely on a second cryptocurrency known as “entry credits” (EC). For reference, one EC enables users to write about one kilobyte of data.

    In order to obtain EC, users must first purchase FCT crypto assets, which can then be exchanged for EC at a set rate. Only by burning FCT coins can a user mint new EC coins, which are not transferable. The fixed-rate, non-transferable EC cryptocurrency is designed to enable companies, governments, and other institutions to take advantage of Factom’s blockchain records management solution with reduced need for direct exposure to the volatility inherent in many cryptocurrencies. For those looking for particularly minimal engagement with the wider cryptocurrency market, some ANOs offer the ability to purchase EC with fiat currency directly. Users can also recruit the help of Factom Blockchain-as-a-Service (BaaS) providers that can take on the role of securing user data to the blockchain.

    In order to keep the cost associated with writing entries to the Factom blockchain low and predictable, the conversion rate between FCT coin and EC coin is set to $0.001 USD — a rate that can only be changed via the Factom crypto platform governance processes.

  9. Factom Competitors and the Future of the Factom Network

  10. Factom is a platform designed to cater to legacy institutions like businesses and governments looking to benefit from transparent, publicly available data security on the blockchain without having to handle cryptocurrency or build out their own infrastructure. As a measure of the project’s success, the Factom network’s data provenance solutions have already been used by the likes of the Bill and Melinda Gates Foundation and the U.S. Department of Homeland Security. Factom competitors include Hyperledger, Tendermint, Arweave, and Ontology. The network is certainly not the only project within the arenas of blockchain data provenance, Blockchain as a Service, and enterprise blockchain adoption. However, with its scalable blockchain architecture and fixed-cost economic model, Factom is proving to be an attractive choice for an increasing number of institutions looking for an immutable audit trail that’s easier to protect, synchronize, and verify than legacy data storage systems.

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