A Comprehensive Beginner’s Guide to Factom Cryptocurrency

Beginner's Guide to Factom Cryptocurrency

The other day, I went to help admit my younger brother to college.

And the college asked to produce notarized copies of all the documents required for admission.

This required me to reach out to a lawyer to sign the copies of the documents. Yes, a lawyer.

He needed to act as an “impartial witness” to verify the legitimacy of the documents.

I wasted quite a bit of time and money in fixing this appointment just so the lawyer could do this small thing.

I thought about why it was required to have a third party to verify my stuff. Why was I doing this in the 21st century? Surely there must be a better way of doing these things.

And what’s the guarantee that I didn’t manipulate the whole notarization process and sign the papers myself?

I mean, couldn’t I just manipulate all of the admission documents, notarize them myself, and then bring them to the college?

How in the world would the college know? 

How is authenticity measured? 

Well, blockchain technology is solving this simple problem. Blockchains let us write down data that can never be changed.

And that is exactly what Factom’s blockchain is doing.

Factom is a cryptocurrency and a blockchain platform which is working on data integrity. It is one of the most interesting applications of cryptocurrencies and blockchain technology available.

Before I jump into the technical talks, let me tell you that since its inception, Factom cryptocurrency (FCT) has increased at a rate of +12,000% and is still looking strong.

So let us start off by looking at what Factom is and how it works.

What is Factom Cryptocurrency?

From Factom’s CEO:

We started Factom to build a more honest and transparent world. We take a pretty simple approach: create software that makes it impossible to change the past and point that software at places where it solves valuable business problems.

-Peter Kirby

Factom

Factom has been there with us for quite some time- its concept came in late 2014.

Factom is an open-source data layer protocol built on top of Bitcoin. It allows business and individuals to make applications on top of Bitcoin’s blockchain.

Wondering how to make an application on top of Bitcoin? Well, we will discuss that later in the article.

Meanwhile, consider this fact:

Bitcoin’s blockchain by design has core constraints which don’t leave much scope for innovative solutions. But over the past 8 years, it has proven to be the most trustable and immutable record of monetary transactions ever created.

And Factom was designed to take advantage of that security and immutability of Bitcoin’s blockchain.

Once something is recorded on the Factom platform, it can’t be changed and becomes forever immutable.

This acts like a trustable record against which any copy can be verified and original records are kept safe.

Factom, Inc. is an Austin-based blockchain technology company that is on a mission to provide blockchain data provenance for complex industries. Factom specializes in building scalable blockchain technology to handle complex enterprise data and volume.

With clients such as the U.S. Department of Homeland Security and the Bill and Melinda Gates Foundation, Factom is the recognized leader in providing blockchain solutions in order to preserve, ensure and validate digital assets. (Source)

What are Factoids?

Factoids (FCT) are the native cryptocurrency token for the Factom platform. Factoids remain on Factom’s blockchain and are traded like any other cryptocurrency in the market.

The FCT acts as fuel to enable its users to do data entry on the Factom platform.

These tokens are used to secure data by linking them to Bitcoin’s blockchain.

Total FCT Supply

At the time of writing this article, the total Factoid (FCT) supply is 8,753,219 FCT.

But at the time of the ICO, there were more.

The Factom ICO began on March 31st, 2015, and investors funded it with 2278 BTCs, which resulted in the creation of 8,75,9968 Factoids (FCT). Out of this, 6749 FCT have already been burned.

The total coin supply is still not capped, and after a technical release (M3) every year 73,000 FCTs will be issued every month.

How Factom Cryptocurrency Works

How Factom Works

The underhood mechanism of Factom is quite tricky to understand.

Factom works on “hash technology”.

A hash is a cryptographic one-way function which transforms any digital artifact (documents, videos, or audios) into a fixed alphanumeric string. This string is like a digital fingerprint print of that artifact. It is impossible to arrive at the original artifact by reverse engineering the digital fingerprint (in the same way you cannot produce a real human thumb from its thumbprint).

It allows for creating hashes of digital artifacts through an API. These hashes are collated and again transformed into a single hash. This single hash is then anchored to Bitcoin’s blockchain which acts as a time stamping machine that can’t be rolled back.

The original hash can later be used for comparison. Anyone can use a document/artifact and hash it, and then compare it against the original hash. If both hashes match, then the document/artifact is original and has not been tampered. And if they don’t match, then the document has been altered.

Factom uses the SHA-256 cryptographic hash algorithm to create such digital fingerprints. At its core, Factom does this by providing three proofs which check that the system is doing what it is intended to do.

  • “Proof of Existence”
  • “Proof of Process”
  • “Proof of Audit”

Whenever an individual or company associates with Factom, they allow them to create hashes of their digital artifacts. The collated hashes are again transformed into a single hash, which is anchored to Bitcoin’s blockchain with a time stamp. Adding the hash every 10 minutes into Bitcoin’s blockchain ensures that an artifact existed at a given point of time. This is “Proof of Existence”.

Factom validates and records all entries on its blockchain. The manner, the process, and the order are also recorded to prevent double spending of money for a double entry. This is “Proof of Process”.

And lastly, as it is anchored to Bitcoin’s blockchain, it can be produced anytime for audit unless Bitcoin’s network is shut down. This is “Proof of Audit”.

This ensures certainty and honesty in record keeping. This is why it’s named “Factom” – a Latin word meaning: “Anything stated and made certain.” 

How is Data Entered into Factom?

How is Data Entered into Factom

Data entries on Factom’s blockchain are paid to prevent spam of data. For this, Factom uses other software tokens known as Entry Credits (EC). EC tokens are non-transferable tokens which can be purchased in exchange of Factoids (FCT) from here.

The sole purpose of having additional tokens is to have a fixed price per KB stored on the blockchain and to remove the complexity of using a direct cryptocurrency like FCT for the users of the Factom service.

FCT and EC both are burned in this process, and neither can be recycled or reproduced.

The Team Behind Factom

Factom is based out of Austin, Texas and operates its business from Shanghai, Beijing, Honduras, London, and Sunnyvale, CA.

The co-founder and CEO of Factom have been a visionary entrepreneur for the last 20 years. Factom encourages its people to be the best versions of themselves and has an experienced team in all areas of operations.

Source: https://www.factom.com/about/team

Factom Token Supply & Factom Market Cap

According to CoinMarketCap, the total circulating supply of Fatcom is 8,745,102 FCT and the current price of each unit is $4.5 that values its market cap at approximately $39 million (at the time of this article).

How to Buy Factom (FCT)

Buy FCT from ShapeShift

Buy FCT from ShapeShift

One of the easiest ways to get ahold of your first Factom (FCT) is to get it exchanged from ShapeShift.

To do this, you will need the following things:

  1. Your Factom address where you would like to get your Factom (FCT). (I have mentioned the wallets for FCT below.)
  2. Bitcoins/other altcoins to exchange for Factom (FCT).

At present, ShapeShift supports 50+ cryptocurrencies (including Factom).

If you need a step by step process of how to go about exchanging your currencies for FCT, see our ShapeShift guide here.

Note: Though this guide is for exchanging ETH for BTC, the process is the same for buying FCT.

Buy FCT from Exchanges

Buy FCT from Exchanges

Here’s how you buy Factom from an exchange.

Step 1: Get a Cryptocurrency (BTC/ETH/LTC)

To get a cryptocurrency like BTC/ETH, convert your fiat currency to BTC/ETH on any popular cryptocurrency marketplace. For converting fiat into BTC, you can use this guide: Buying Bitcoin Using A Debit/Credit Card.

If you already have BTC/ETH/LTC, you can skip this step.

Step 2: Crypto to Factoid (FCT)

There are few major exchanges from where you can exchange BTC/ETH for Factoid (aka Factom):

  1. Bittrex– Supported Pairs FCT/ETH, FCT/BTC
  2. Cryptopia– Supported Pairs FCT/BTC
  3. Poloniex– Supported Pairs FCT/BTC
  4. Upbit– Supported Pairs FCT/ETH, FCT/BTC
  5. Shapeshift.io

Out of these, ShapeShift is the easiest way to get your first FCT token (as I explained before).

Now that you have bought your Factoid tokens, move them to a Factom wallet.

Step 3: From Exchange to Factom Wallet

At present, Factom only supports desktop wallets on Linux, Mac, and Windows platforms. The desktop wallet is known as the Factom Enterprise wallet, which is a GUI wallet.

  • Download the most recent version of the Factom wallet here.

You can run the wallet online or locally. You may need to wait for synchronization with the blockchain. (This can take some time.)

Factom Wallets

At present, not many wallet options are available for holding FCT tokens. Factom cryptocurrency is also in the pipeline of Jaxx and Exodus, which are two popular multi-currency wallets.

But for the early adopter, enough options are available.

Factom Wallets

At present, the following options are available for storing Factom:

  • Desktop Wallet –  The Factom Enterprise wallet is available on Linux, Mac, and Windows platforms. You can follow this official step by step installation guide from here, and download your wallet from this link.

  • Paper Wallet – If you are comfortable with paper wallets, you can make one using this guide on FactoidPapermill. By using this option, you won’t be able to download a traditional printable version of the paper wallet. But this option will allow you to generate private and public factoid addresses which you can write or print onto a piece of paper. FactoidPapermill is available for Windows, Mac, and Linux.
  • Exchanges – You can store Factom at different exchanges (mainly Poloniex and Bittrex). But don’t store your Factom for long on exchanges. If you are trading, then you can store for 1-2 days, and that’s probably OK.

Factom Products and Use Cases

Factom Products and Use Cases

Factom technology is a cheap and cost-effective way of separating the Bitcoin blockchain from the Bitcoin cryptocurrency and use it for other applications. In this way, Factom uses Bitcoin’s blockchain for non-Bitcoin transactions and opens up a wide range of use cases for the real world.

Possible uses:

  • Immutable Audits
  • Medical Records
  • Voting Systems
  • Property Titles
  • Legal Applications
  • Journaling Applications
  • Service Level Agreement (SLA) Logs

Based on these use cases, some of the products of Factom are already in use or development:

  1. Factom Harmony – A comprehensive solution for the mortgage industry.
  2. Factom dLoc SMARTRAC – A document/product authentication and verification tool.
  3. Factom Apollo – A database auditing tool.
  4. Factum Iris – A tool to track true identity and ownership of IoT things.
  5. Factom Hera – A tool to build private and permissioned blockchains.

Factom’s Future

The Factom cryptocurrency and development of the Factom platform are both performing extremely well. With a 700% increase in the price of each unit of Factoid (FCT) since the start of the year (2017), its future is looking promising.

I feel Factom’s potential is highly undervalued, and as the Factom platform matures, it will burn more Factoids (FCT) which will inevitably raise prices in the long run.

Factom’s future is also secured because of numerous grants and funds from various individual investors and institutions. Some notable funding moments:

  • Secured $8 million in Series A funding in April 2017.
  • United States DHS granted Factom $200K in February 2017.
  • Secure $1 million in crowd sale in July 2015.
  • Secured $500K grant from the Gates Foundation.

This start is looking promising, as Factom’s team is working hard to meet its three milestones since the inception of the project.

Milestone 1: Central Server Model

This milestone was achieved in September 2015 when Factom’s pioneer servers went live. Though at that time, it was a centralized platform controlled by Factom. But, it allowed applications to be built upon Factom’s protocol.

Milestone 2: Factom Federation

Factom has released Factom Federation Testnet (FF) Release Candidate 1 (RC1). This was formerly referred to as M2. It was released in April 2017 with its Entry Credits tokens marketplace and a consensus mechanism of federated and audit servers. And at this point, it is being tested thoroughly by the QA team and the Factom community. To find more technical details, visit here.

Milestone 3: Election Protocol

This is the last and final milestone which will be implemented according to Factom’s roadmap. It will have an election mechanism to elect 32 federated servers and 32 audit servers. It will be truly democratic and decentralized as people having more Entry Credits will control these servers. But it is still a thing of the future…

Resources

Factom’s technology is not that straightforward to understand. I tried covering important high-level aspects of the project. To deep dive into Factom, use these links:

Do you still have questions about Factom? Ask away in the comments below!

Some more trending posts to read here:

3 thoughts on “A Comprehensive Beginner’s Guide to Factom Cryptocurrency”

  1. Hi please can you point me to a URL or similar that can show me how I can safely and securely invest/buy – facto cryptocurrency please.

    1. Here are few exchanges that will let you buy Factom.

      Poloniex
      Bittrex
      Shapeshift.io

      Also, in the above article, I have mentioned how to buy Factom from an exchange. You can choose one of these exchanges and see maybe a video on youtube about that exchange and follow the above-given steps. You will be able to buy it securely.

  2. You use the terms FACTOM and FACTOID in apparently the same context referring to them both as cryptocurrencies – are they in fact the same thing or are you just being a bit ‘loose’ with the terms?

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