Factom: Blockchain-Based Data Integrity and Immutable Records

What is Factom

Friends, imagine that we live in an era of information explosion, with massive amounts of data generated every day, such as medical records, land ownership certificates, supply chain logistics information, and so on. This data is extremely important—we want it to be authentic, tamper-proof, and easily accessible and verifiable. However, traditional recording methods, whether paper-based or centralized databases, may face problems such as tampering, inefficiency, or high costs.

Factom (project abbreviation: FCT) is like a “digital notary office” and “super archive” specifically built for this important data. It is not an ordinary blockchain; its core goal is to provide enterprises and institutions with a decentralized data integrity protocol, allowing any type of data to enjoy the security and immutability brought by blockchain technology.

Simply put, Factom allows you to record the “fingerprint” of any digital information (what we call a hash value, which is like a unique digital ID for a file) and securely anchor this fingerprint on the blockchain. In this way, you can prove that this information did exist at a certain point in time and has not been altered by anyone since.

The typical usage process is: enterprises or individuals submit the data that needs to be notarized (such as contracts, documents) to the Factom network, which generates a unique “digital fingerprint” (hash value) for this data, then organizes these fingerprints, and finally anchors a summary “fingerprint” to the Bitcoin blockchain. In this way, your data gets the security guarantee of the Bitcoin blockchain, but without occupying a lot of space or incurring high fees like Bitcoin transactions.

Project Vision and Value Proposition

Factom’s vision is to build a future where people can trust their documents, digital data, and all connected “things,” and enable developers to create world-changing new applications on this foundation. Its mission is to provide blockchain data traceability capabilities for complex industries.

The core problem it hopes to solve is the widespread “lack of trust” in the current global economy. Due to the lack of trust, we need to invest huge resources in auditing and verifying records, which reduces efficiency and increases costs. Factom eliminates this blind need for trust by providing a precise, verifiable, and immutable audit trail system.

Unlike many other blockchain projects, Factom’s uniqueness lies in its separation of the “data layer” (i.e., data notarization) from the “value layer” (i.e., cryptocurrency transactions). This means that enterprises can use Factom to protect their data integrity without directly holding or managing volatile cryptocurrencies. This design allows Factom to be widely used in fields such as medical records, financial data, legal documents, compliance audits, land ownership registration, and even supply chain management.

Technical Features

Factom’s technical design is very ingenious—it’s like an efficient library system, rather than piling all the books in one big room:

Data Structure and Anchoring

Factom adopts a unique distributed ledger architecture. It does not put your raw data directly on the blockchain, but only stores the “digital fingerprint” (hash value) of the data. These fingerprints are organized into “chains,” which you can think of as folders, and the “fingerprints” are the files in the folder. This greatly reduces the storage burden on the blockchain and avoids the problem of “blockchain bloat.”

Even more impressively, Factom summarizes these “digital fingerprints” (called “directory blocks”) every ten minutes or so and anchors their hash value to the Bitcoin blockchain. In this way, Factom cleverly leverages the powerful security and immutability of the Bitcoin blockchain to provide the highest level of protection for its own data, while avoiding the slow speed and high cost of storing large amounts of data directly on the Bitcoin chain.

Consensus Mechanism

The Factom network reaches consensus through a mechanism similar to the Raft algorithm. In this network, there is a group of nodes called “Federated Servers” responsible for writing data and receiving rewards. These servers randomly elect a leader to coordinate work, and their responsibilities rotate every minute, ensuring that no single entity can permanently control the system, thereby enhancing decentralization and security.

Scalability

Because Factom only stores the hash value of data, not the raw data itself, and adopts a layered structure and anchoring mechanism, it can efficiently handle large amounts of data and maintain high scalability. The actual data content is stored in distributed hash tables (DHTs) and shared across the peer-to-peer network.

Tokenomics

Factom has designed a dual-token system, which is quite unique in the blockchain world, aiming to better serve enterprise users so they don’t have to directly face cryptocurrency volatility:

Factoids (FCT)

• Token Symbol: FCT
• Use: FCT is the native cryptocurrency of the Factom network, mainly used for the decentralized network and to prevent spam. It can be freely traded on cryptocurrency exchanges.
• Issuance Mechanism: The supply of FCT is “unlimited,” but its design is deflationary because FCT is destroyed when used to purchase Entry Credits. Federated Servers receive FCT as a reward for maintaining the network, with about 73,000 FCT issued per month.
• Total Supply and Circulation: According to some sources, the total supply of FCT is about 10.46 million. However, platforms like CoinMarketCap report a circulating supply of 0 FCT, which may indicate liquidity issues or outdated data.

Entry Credits (ECs)

• Use: ECs are the “fuel” of the Factom network, used to pay for writing data (i.e., creating “entries”) on the Factom chain, and can also be used to vote for authority nodes.
• Features: ECs are non-tradable, meaning you cannot buy and sell ECs like FCT. They can only be purchased with FCT, and the price is fixed—1 EC is worth about $0.001 (one-tenth of a cent), allowing you to write 1KB of data.
• Design Philosophy: This fixed price and non-tradable design is intended to allow enterprise users to use Factom services without worrying about cryptocurrency price fluctuations, thereby lowering the threshold for enterprises to adopt blockchain technology.

Project Transformation: Accumulate Network

It is important to note that the Factom project has undergone a major transformation. At the end of 2021, Factom’s Authority Node Operators (ANOs) voted to upgrade and rename the project to Accumulate Network. This means the Factom protocol has transitioned to a brand new, rewritten codebase. The original FCT tokens can be converted to Accumulate’s ACME tokens at a ratio of 1:5. The Accumulate network has its own tokenomics, such as a total supply of 500 million ACME, and implements deflation through a burn mechanism as network demand increases.

Team, Governance, and Funding

Core Team

Factom was co-founded in 2014 in Austin, Texas by Paul Snow and Peter Kirby. Paul Snow is the CEO and founder of the project, and Peter Kirby is also a co-founder and CEO. Other key team members include Chief Scientist Brian Deery and Board Chairman David Johnston.

Funding and Development

Factom raised about $541,000 in its initial coin offering (ICO) in 2015. In addition, it received a total of $23.6 million in funding from investors such as Draper Associates, Fastforward Innovations, and Overstock. Factom also received grants from the U.S. Department of Homeland Security and the Bill & Melinda Gates Foundation, demonstrating its potential for application in government and nonprofit sectors.

Governance Transformation

Factom was initially operated by servers owned and run by the Factom company. To achieve more thorough decentralization, the project launched the “Milestone 3” (M3) plan, aiming to establish a governance structure involving community members, FCT holders, EC users, and Authority Node Operators.

It is worth noting that in the summer of 2021, Factom Inc. sold its 40 blockchain patents to Inveniam. Subsequently, Factom’s Authority Node Operators voted at the end of 2021 to upgrade and rename the project to Accumulate Network, which is a complete rewrite of the Factom codebase, marking a new stage for the project.

Roadmap

The development of Factom can be divided into several important stages:

Historical Milestones

• 2014: Project launched, Factom company founded.
• Early 2015: Released the first version of Factom, followed by the initial coin offering (ICO).
• 2015: Selected by Plug & Play FinTech accelerator.
• 2016: Named one of Austin’s A-List startups. Received a $500,000 grant from the Bill & Melinda Gates Foundation.
• 2018: Received a $200,000 grant from the U.S. Department of Homeland Security. Began preparations for the fully decentralized “Milestone 3” (M3).
• Summer 2021: Inveniam acquired 40 blockchain patents from Factom Inc.
• November 2021: Factom validators unanimously voted to upgrade and rename the project to Accumulate Network, completing the transition via hard fork.

Future Plans (Accumulate Network)

Since Factom has transitioned to Accumulate Network, its future development plans are mainly focused on the Accumulate project:

• 2022 to 2023: Focus on ecosystem and core protocol development.
• Ecosystem Updates: Plans to integrate with major Layer 1 protocols and mainstream stablecoins.
• Core Protocol Updates: Includes staking rewards, phase automation, validator automation, and signature chain pruning features.

Common Risk Reminders

When learning about the Factom project, there are several risks to be aware of. This is not investment advice, but to help you view the project more comprehensively:

Project Transformation and Activity Risk

Factom has transitioned to Accumulate Network. This means the original Factom protocol is no longer an independently active development project, and its official website (factomprotocol.org) is offline. If you are interested in the original FCT token, you need to be aware that it has transitioned to the ACME token, and the activity of the original Factom ecosystem may have significantly decreased. When researching, distinguish between Factom and Accumulate.

Tokenomics and Liquidity Risk

The circulating supply of the original FCT token is reported as 0 on some data platforms, which may mean its market liquidity is very limited. In addition, the cryptocurrency market itself is highly volatile, and the historical price of FCT has also experienced dramatic fluctuations. Any investment carries the risk of principal loss.

Technical and Security Risks

Although Factom emphasizes security in its design, any complex software system may have unknown vulnerabilities. While it anchors to the Bitcoin blockchain to enhance security, its own protocol layer still requires ongoing auditing and maintenance. Accumulate, as a rewritten version of Factom, also needs time to prove its stability and security.

Compliance and Operational Risks

The regulatory environment for blockchain and cryptocurrencies is still evolving. Projects may face compliance challenges from different countries and regions. In addition, the long-term operation and development of the project also depend on the continued commitment of the team and community support.

Please remember, the above information is for reference only and does not constitute any investment advice. Be sure to conduct your own in-depth research before making any decisions.

Verification Checklist

To help you further understand and verify the Factom project, here are some links and information you can consult:

• Whitepaper: Factom’s whitepaper can be found on its old official website or related archives.
• Official Website: The original Factom official website is factom.com, but factomprotocol.org is offline. Since the project has transitioned to Accumulate Network, it is recommended to consult Accumulate’s official materials.
• GitHub Activity: The Factom project is open source, and its codebase can be found on GitHub (e.g., FactomProject). Checking code commit records and update frequency can help you understand the project’s development activity.
• Block Explorer: You can check on-chain data through Factom’s block explorers (such as explorer.factom.pro, explorer.factoid.org). For the Accumulate network, use its corresponding block explorer (such as explorer.accumulatenetwork.io).
• Team Information: You can check the background and experience of core team members on LinkedIn, the project’s official website, or cryptocurrency data platforms.

Project Summary

Factom is an early project with an innovative spirit in the blockchain field. It was launched in 2014 to address the pain points of enterprise data storage and verification. By anchoring the “digital fingerprint” of data to the Bitcoin blockchain, it cleverly leverages Bitcoin’s security while avoiding the efficiency and cost issues of traditional blockchains. Its dual-token model (FCT and EC) is uniquely designed to provide enterprises with stable data notarization costs without directly bearing the risk of cryptocurrency volatility.

Factom has received recognition and funding from organizations such as the U.S. Department of Homeland Security and the Bill & Melinda Gates Foundation during its development, and has shown application potential in fields such as healthcare, law, and supply chain. However, as blockchain technology has rapidly evolved, the Factom project underwent a major transformation in 2021, with its core protocol upgraded and renamed to Accumulate Network. This means the original Factom protocol is no longer an independently developed project, and the FCT token has transitioned to Accumulate’s ACME token.

In summary, Factom is a historically significant blockchain project whose innovative concepts and technical design have influenced subsequent data notarization and enterprise-level blockchain applications. However, at present, the focus has shifted to Accumulate Network. Therefore, if you are interested in this project, it is recommended to focus your research on Accumulate Network and learn about its latest developments, technical features, and ecosystem. Please remember, the above content is for educational purposes only and does not constitute any investment advice. Be sure to do your own research and make decisions cautiously.