What is Factom?
Factom is a distributed record-keeping system used to store huge amounts of records on the blockchain, functioning as a verification and validation layer.
The fundamental concept of Factom is to separate the Data Layer (notarizations) from the Value Layer (such as the Bitcoin protocol that facilitates value transfer) thereby allowing anyone to securely notarize documents in a separate system. An anchor of the system’s records is then recorded on the Bitcoin blockchain, ensuring the immutability of the underlying data. Factom requires Federated Servers (similar function to a node), which run all operations and anchor all information.
The applications of the Factom protocol can be extended to a wide range of industries.
Essentially, Factom can be applied to any business or industries that possess a need to organize data effectively and preserve its integrity. Basically, extending the traits of Blockchain technology that includes immutability, censorship-resistant, easy verification and validation. Such applications include:
Factom launched a solution called Factom Harmony focusing on mortgage data for banks
Grant funding by Bill & Melinda Gates Foundation to address one of the world’s most urgent problems — the maintenance of medical records that are secure, readily accessible and reliable
3.Smart Cities in China:
Factom has sealed two landmark agreements in China. One is to provide data integrity services to iSoftStone, which has strategic planning for more than 80 smart cities around the country, and the other with Ancun Zhengxin, a major Chinese notary service.
Factom isolates the use of a protocol from a tradeable token, through a two-tiered payment system using Factoids (FCT) and Entry Credits (EC).
This to me, is a novel way to ensure business practicality, since:
1.Firms would be wary of holding cryptocurrencies due to legal concerns or due to its internal policies
2.The extreme volatility of cryptocurrencies could adversely impact the financial budgeting functions of any business
In order to address these real issues, Entry Credits (EC) were created to isolate the use of Factom’s protocol from the tradeable token, since companies can purchase EC directly from Factom enterprise. EC allows companies to enter data into the protocol, and one EC allows you to enter up to 1kb of data and costs $.001 at present.
Is There a Need for Factom (FCT) Tokens?
Factom’s tokens are called Factoids, or FCT. The main reason for the existence of FCT tokens is the idea of scarcity. Anyone can input data into Factom layer since it is nondiscriminatory. In order to limit spam, scarcity has to come into play. Therefore, FCT adds a cost to the RIGHTS of putting data into the Factom protocol, as well as ensuring there’s no centralization. What do I mean by centralization? Assuming if it uses BTC instead; there must be a party that issues the RIGHT to add data into Factom protocol, and this is blatant centralization!
The interesting thing about entry credits is how they come into existence. Factoids are converted into entry credits. Entry credits are not transferable or reusable. They are a one-off token whose sole purpose is to allow data to be hashed and inserted into a private chain.
Factoids are ‘burned’ when entry credits are created. Burning means that the factoids are destroyed, thereby limiting the number of factoids in existence, at least until Milestone 3 is reached. Entry credits are also burned upon usage. So until Milestone 3 is reached the factoid supply is deflationary, that is that usage reduces the number of factoids on the market.
The theory behind this is that a large burn rate of factoids will produce a diminishing supply, and as the factoid price goes higher, the number of entry credits per factoid will increase, as the entry credit price is fixed. Should you be an investor, and once Factom usage takes off, it means that your holdings should theoretically increase in value.
The Factom team is divided into the executive team and core developers. Looking at their credentials, they possess strong expertise in the tech line and the business world and has offices in major cities. Factom also has deep connections with the business world, in government and banks too.
Supporters & Investors
Factom has amassed a credible line of backers that are well-known and influential. The timeline of Factom’s traction is as follows:
On Oct. 5, 2016, Factom announced the success of a $4.2 million Series A capital raise, led by billionaire investor Tim Draper. Draper auspiciously stated afterwards: “I believe that the Factom team has the opportunity and the potential to build a company greater than Oracle and Palantir and IBM combined”
On Nov. 18, the Bill & Melinda Gates Foundation announced they had awarded Factom a $500,000 grant “to build a Proof of Concept prototype of a digitized medical record system for individuals living in remote developing areas of the world”
Three days later, Smartrac—the leading provider of radio-frequency identification (RFID) products worldwide—announced they had partnered with Factom to create an integrated document-verification-and-authentication solution. And last the U.S. Department of Homeland Security revealed a second, follow-on grant to Factom designed “to advance the security of digital identity for Internet of Things (IoT) devices.
The closest competitor in the space is Tierion. Interestingly, Tierion’s founder used to be on Factom’s team; he designed the Factom explorer. The main differentiator of Tierion as stated by the founder was to create a better user experience since using Factom’s protocol is complicated. Tierion just raised 25 million in their ICO, in which the token didn’t really serve any purpose other than raising funds. Interestingly, Factom’s ICO raised only 1 million, with series A funding in April this year amounting to 8 million, and they already have working protocols around a host of industries.
Factom’s developmental roadmap is as follows:
Milestone 1 (July 2015): Building their Blockchain through a genesis block and the Factom software protocol which was centralized to host the software. This milestone also entailed the establishment of pioneer servers.
Milestone 2 (Dec 2016): Sets in place the consensus algorithm for the Factom protocol—the software supporting distributed processing—as well as enables transaction times in a matter of seconds, supports multiple blockchains including Bitcoin and Ethereum, and provides a more robust network, as well as new tools in its development suite/public test-net. There’ll be 8 federated serves for the network
Milestone 3 (12-16 months later): Point of decentralization where there’ll be 32 federated and 32 audited servers on an electoral format to ensure good behaviour. Issuance of 73k factoids per month to balance the supply
The MACD indicator implies that prices are undervalued, with a crossover over the signal line in the negative territory. The RSI however, shows that price is marching a little bit towards the overbought territory
In the long-term, prices look very stable, with an inclination to the upside. This can be seen in the weekly candles where prices are nearing the long-term trend support. There’s huge potential for the upside.
In my opinion, Factom is an undervalued coin which may seem boring but holds huge potential. Given the fact that that there is no FCT supply until Milestone 3 (presumably middle of next year) and that FCT will be “Burned” to produce ECs, its value will increase with usage. Factom has great appeal to organizations, thanks to its dual-tiered currency system. Considering that most of its partnerships are in the pipelines and kept silent due to Non-Disclosure Agreements, all it takes is confirmation of adoption by major corporations for Factom to sky-rocket.