The Factom blockchain is a decentralized publication protocol for building record systems that are immutable and independently verifiable. It enables secure storage of digital proofs for data provenance and integrity solutions without disclosing private data or requiring trusted intermediaries.
Unlike other public blockchains, Factom uses a distributed ledger architecture that allows related entries to be linked chronologically in a chain for more efficient storage and retrieval. Entries can contain any kind of data, but are not intended for storing private data. Entry data is hashed before being written into an entry block, and the actual entry data is stored in distributed hash tables and shared peer-to-peer.
Each directory block is secured in the Factom blockchain is then further secured by cryptographic anchor entries written into Bitcoin. Anchoring into other public blockchains allows for interoperability and third-party security.
The public Factom blockchain is governed by a peer-to-peer network of federated servers whose membership is based on performance and community support. Anyone can read entries and submit write requests for a fixed cost based on chain and entry size. The Factom protocol is open source and anyone can run a follower node or create a private network for development and production use cases.
Building the Factom Blockchain Ecosystem
FAQs about the Factom Blockchain
Why does Factom need a token?
Decentralized systems need a reward mechanism to incentivize participants. Having a closed system requires cooperation, and builds the long term network value creation. The overarching goal is to move transactions off the Bitcoin blockchain. Requiring Bitcoin transactions defeats this goal. The token creates artificial scarcity to reduce spam.
What are Factoids and Entry Credits?
The Factom® blockchain uses a cryptocurrency called Factoids (FCT). However, unlike traditional cryptocurrency models, the protocol uses a two token system. While Factoids are traded externally like other cryptocurrencies, Entry Credits (EC) are used to write to the network. First, a user purchases Factoids, which are then burned to create Entry Credits, which are the only payment accepted to write to the blockchain. The conversion rate between Factoids and Entry Credits is fixed at $.001, allowing for the cost of entry into the blockchain to remain predictable, and not dependent on the fluctuating price of a coin.
In short, Factoids are converted to Entry Credits at a variable exchange rate set by the Federated servers. Entry Credits purchase fixed amounts of data into the Factom blockchain.
Entry Credits are not transferable, and can be treated as a product instead of a currency. This is great for institutions who shun cryptocurrency. Cost to use the system is based on usage, independent of Factoid exchange rate. It is used in the voting system. People who use the system have a say in how it is run, not currency holders or people who burn electricity. The Value of Entry Credits as a hacking target is greatly diminished since Entry Credits are not transferable.
To convert your Factoids to Entry Credits, or check your Factoid balance, follow the documentation here: https://docs.factom.com.
Who runs the Factom network?
Factom servers, or nodes, are run by individuals or organizations who apply for a grant to become an Authority Node Operator (ANO). ANOs are selected by a committee based on trustworthiness, professionalism and volume of work, among other criteria. The top servers ranked by user support will be the Federated Servers, followed by the Audit Servers (considered alternates to step in were a Federated Server to lose support or goes offline). For more information, see our Factom Governance documentation.
Do Factoids have their own blockchain?
Factoids are implemented on their own Chain in Factom.
Is there a separate Proof of Work or other consensus mechanism for Factoids, independent of Factom?
No. That said, the Factom chain and the Entry Chain are managed by the Factom Servers (they are the application using these chains) so they validate them in real time. No invalid entries can be placed in these chains.
How can this system be stable with infinite inflation?
Unlike Bitcoin, there is a source and a sink. The usage fees are burned, and are not captured by the Federated Servers. The Federated Servers collectively set the cost paid per entry. They can raise or lower it based on the Factoid/USD rate, so that each KiB costs a specific dollar amount. Their goal is to remove Factoids from the market, so the fixed payout of Factoids they earn per period increase in value. The quantity removed from the market is price times quantity. They must find a price which is high enough to burn as many Factoids, without lowering quantity too much. There will be a negative feedback loop. High Factoid prices mean few Factoids are burned, and supply increases. Low Factoid prices mean that tons are swept from the market if usage stays constant. Given a constant usage, the Factoids will settle at a constant price. Settling price for Factoids will be directly proportional to usage.
How can I build applications on top of Factom?
You can find the full coding tool set on GitHub. You will also find useful links to developer tools and documentation. Some handy documentation can be found at https://docs.factom.com. For community support and technical help, you can sign up for Discord: https://discord.gg/VgNqE8W.