Recap on Factoids
The Factom token is a tradable right to obligate the Factom protocol. The original supply of Factoids was set by the software token sale. Once the full Factom protocol is running, Factoids will be issued at a fixed rate to the servers that run the protocol. For now, until the protocol is completely deployed, no new Factoids will be issued.
To use the Factom protocol, Factoids are converted to Entry Credits (EC). EC are used to make entries into the Factom blockchain. Once a Factoid is used, the right is gone. The right to write into the Factom protocol is generated by those parties running it. This right is ended by those using the protocol. The idea is to align incentives so that those that run the protocol are rewarded if and only the protocol is valuable.
We are currently at our first milestone, Factom Genesis. We have two more targets to hit before we are fully up and running. Anyone can play with what we are creating. Check out our Github. We are working hard to make it easy to develop apps on top of Factom and to write entries in the system. Have a look at our Developer Sandbox.
There is a fixed number of Factoids that will be paid to the servers. This is roughly 73,000 Factoids per month. To write entries into the Factom blockchain, EC must be spent, they are obtained by converting Factoids into EC. This isolates end users of the Factom protocol from ever touching cryptocurrency. EC can not be traded nor can they be converted back to Factoids.
We are building the Factom protocol to be a robust and stable system. The structure guards against those wishing to manipulate the use of the protocol, the price of the token, the degree of speculation, and the number and degree of “pump and dump” attacks. We modeled the supply of tokens, price discovery over the resulting supply and demand curves, the feedback of the token exchange rate, and mapped the effects over time.
The servers set the exchange rate of Factoids to EC. We incorporated this mechanism into the Factom protocol so that EC can remain at a low cost even if the Factoid price fluctuate. The token price will trend to the value of the protocol because the value is measured in the volume of entries written into the protocol.
If the value of Factoids exceeds the number of Factoids used, then the supply of Factoids will decrease, pushing the price up.
If the value of Factoids is less than the number of Factoids used, then the supply of Factoids will increase, pushing the price down.
“Factoids are demanded and removed from circulation when users buy Entry Credits (EC) to use Factom. The Factoid/EC exchange rate is set by the Federated servers. The goal is to have a stable price for EC. This will allow Factom users to ignore the Factoid price, just like how Gmail users can ignore the Google share price”. – Brian Deery, Factom Chief Scientist.
The value of Factoids will reflect the value of the protocol, and is resistant to speculation over the long term.
Factom Foundation VS Factom Inc.
We have gotten a lot of questions about the recent press release by Kuala Innovations. The important thing to clarify is that the investment was in Factom Inc. not the Factom Foundation.
“The Board of Kuala Innovations Limited (“Kuala” or the “Company”) is pleased to announce that it has subscribed for 3.64 per cent. of the issued shares of Delaware incorporated private company Factom, Inc. (trading as “Factom”), a data company working with multi-national companies to integrate blockchain technology for data storage, management and security across industries (“Factom”).”
The Factom Foundation is a London based foundation that is developing open source software anyone can use. We are happy for Factom Inc. as they are helping spread the mainstream adoption by building software on the Factom protocol. The Factom Foundation encourages entities such as Factom Inc., and others, to use the Factom protocol in order to create solutions that solve problems by utilizing the Factom protocol.
How Factom Inc. affects those holding Factoids is simple. Factom Inc. is building software that is utilizing Factoids and in doing so giving them value.
Thanks for being an awesome and supportive community.
The Factom Foundation Team