There are now over 3000 cryptocurrencies on CoinMarketCap with new ones being added nearly every day. This influx of new cryptocurrencies is largely due to the open-source nature of crypto and the ERC-20 token standard on Ethereum. 

With this token standard, it is relatively easy to create your own cryptocurrency and other blockchains such as Tron have launched their own token standards as well (TRC-10 & TRC-20), which has resulted in even more tokens in a highly saturated market.

However, it wasn’t always this way. Before Ethereum’s token standard, it was rather difficult to create a new cryptocurrency. It required a greater understanding of blockchain technology and coding. Crypto project’s actually needed a quality team of talented developers, especially if they were building something new and not just a fork of Bitcoin. 

One such project that falls into this early OG category of cryptocurrencies is Factom (FCT) – a data integrity protocol that harnesses the security and immutability of the Bitcoin blockchain to secure the integrity of data. 

In the following article, I provide a comprehensive and subjective look at Factom (FCT) so that you can fundamentally understand how it differs from Bitcoin and what it hopes to achieve. I delve into its unique characteristics, its purpose, level of adoption, as well as its issues and controversies surrounding it. 

By the time you’re done reading, you’ll fundamentally understand Factom and what sets it apart from so many cryptocurrency projects. So buckle up and enjoy this comprehensive guide to understanding the popular digital asset – Factom (FCT).

Factom (FCT) History

Factom (FCT) is an OG crypto first conceived in late 2014 out of Austin, Texas when developers came to realize it wasn’t so easy to make scalable applications on top of Bitcoin. Over the past 10 years, and even in 2014 when Factom was conceived, the Bitcoin blockchain proved itself to be the most trustworthy and immutable record of monetary transactions ever created. 

However, Bitcoin’s blockchain has several core constraints that made it impractical for applications that hoped to take advantage of Bitcoin’s security, trustworthiness, and immutability of data. Entering data into the Bitcoin blockchain is prohibitively expensive at volume, bloats the Bitcoin blockchain, and is incredibly slow. Therefore, no one could utilize Bitcoin’s key attributes for data and system integrity applications… that is until a group of brilliant minds created Factom. 

The Factom project was created by Paul Snow, David Johnston, Peter Kirby, Brian Deery, and Jack Lu who established the project in 2014. Very early on, the founders and team at Factom recognized bitcoin’s limitations to be a practical blockchain for Enterprise data solutions. This led them to start building Factom as an open-source data layer built on top of Bitcoin. This endeavor resulted in the scalable Factom blockchain that’s capable of ensuring the provenance and integrity of complex enterprise data.

Factom Fund Raising and FCT Token Distribution 

Once Factom was fully conceived and development was in full force, the project raised money through three different seed rounds. The first was on April 1, 2015, where Factom raised $140,000 from undisclosed investors. The second was on July 21, 2015, where Factom raised $1 million in funding from Tally Capital, and the third was on October 14, 2015, where Factom raised $400 thousand from FastForward Innovations.

Following the seed rounds, Factom held an ICO token presale on March 31, 2015. Over 1 million Factom (FCT) tokens (called Factoids) were sold in exchange for 2,278 BTC (worth approximately $1.1 million at the time) within 24 hours. As for the token distribution, 50 percent of the total FCT token supply was sold during this ICO, 30 percent were reserved for Factom’s core team and key contributors, and 20 percent was reserved for early purchasers from the seed rounds. 

Later in Factom’s lifespan when the project was fully launched and working, Factom completed its first Series A funding round with $8 million in funding from Draper Associates, Plug and Play, Peeli Ventures, Medici Ventures, and Harvest Equity. Then, in August 2018, Factom completed a Series B funding round raising $6 million in capital from FastForward Innovations as a SAFE (Simple Agreement for Future Equity) note.

Purpose of the Factom Protocol

“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.” – Former Factom CEO Peter Kirby

Factom is an enterprise blockchain protocol that ensures the integrity of data and digital assets. The Factom protocol is open-source, decentralized, and can be easily integrated into legacy systems without the need to handle cryptocurrency. Therefore, it provides a low, fixed cost source of indisputable truth and verification of data and systems for business and government.

The Factom protocol takes advantage of Bitcoin’s secure and immutable blockchain by anchoring itself into the Bitcoin blockchain, thus benefiting from the security of Bitcoins hash rate. Factom then offers businesses, governments, and enterprises the ability to publish data directly into the Factom blockchain which benefits from Bitcoin’s security, trustworthiness, and immutability while running faster, cheaper, and without bloating Bitcoin. 

This data preserved in Factom acts like a trustable record against which any copy can be verified and original records are kept safe. Therefore, documents and data stored on Factom can easily be audited, adding another attractive feature to Factom for enterprise business and governments.

The businesses and entities that Factom is intended for, include those in which important data regularly changes hands. Documents such as land grants, medical records, financial records, and more require the integrity of their accuracy and must be stored securely where they cannot be changed or tampered with. 

All in all, the Factom protocol offers a scalable solution for the secure storage and transferring of data, that is its purpose and here are some potential use cases:

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

Purpose of Factoids (FCT)

Decentralizing the Factom Protocol
Factom’s native cryptocurrency, Factoids (FCT), play an integral role in decentralizing the Factom protocol and prevent users from spamming the network. Nodes running the Factom network receive Factoids as a reward for maintaining the network. The network releases these rewards at a fixed rate (~73,000 per month) in a process that’s independent of their price.

Governance
Moreover, Factoids are used to buy another crypto called Entry Credits (EC) on the Factoid platform. ECs are not traded on exchanges and are solely used to pay for data Entries and vote for Authority nodes. Whenever EC is purchased, FCT is burned out of existence forever. 

PegNet (PEG) Implementation

Yet another utilization of FCT, is its involvement with the new stablecoin 4.0 network built on top of the Factom protocol – PegNet (PEG). PegNet is an innovative new stablecoin network for payments, conversions, and store of value for digitized assets. 

The protocol is being developed by 26 Factom focused organizations and the native cryptocurrency of the PegNet protocol (PEG) can be created in two different ways; 1) via PoW mining and 2) via burning Factom (FCT). 

To create PEG tokens via burning FCT, Factoids (FCT) must first be converted into pegged Factoids (pFCT), which is one of many pegged assets on the PegNet network. This process of conversion effectively burns the FCT from the Factom Protocol, but credits pFCT by PegNet. The pFCT can then be converted into any other pegged asset token (pAsset) or into PEG directly. 

All in all, the PegNet adds payment utility to the Factom protocol, and increases the liquidity of FCT through conversion to pFCT, and forever reduces the Factom (FCT) supply. Therefore, demand for all the assets in PegNet will drive demand for the FCT token and drive its price up as a result.

Factom Issues and Controversies

All cryptocurrencies suffer from various issues and some sort of controversy and while Factom is no different, it was rather difficult to scoop up some dirt on them. One of the biggest issues/controversies surrounding Factom is that the Factoid (FCT) supply is not capped, meaning FCT tokens will forever be issued, regardless of price and supply. 

Currently, Factoids are released at a fixed inflation rate of 10 percent. This rate of inflation shouldn’t be a huge problem if the Factom protocol is heavily adopted, but the problem is that it’s not. FCT tokens are burned when ECs are purchased for data entry inputs. However, if the Factom protocol isn’t being widely used by businesses, enterprises, and governments, not enough FCT is being burned and the supply is becoming too large. 

We can already see the negative price effects of the 10 percent inflation rate of FCT. Factom’s FCT token has been in a downward spiral since its peak in January 2018. While many tokens have recovered somewhat in 2019, Factom’s FCT token continues to find lower lows. 

Therefore, it appears that FCTs 10 percent inflation rate and lack of sufficient protocol adoption is crushing the price of FCT. 

However, as previously mentioned, the new stablecoin 4.0 network built on top of the Factom protocol – PegNet (PEG) – will drive demand for the FCT token and drive its price up as a result. The Factoid (FCT) supply will continuously be reduced as demand for all the assets in PegNet increases.

Factom (FCT) Partnerships & Working Products

Factom is one of the most impressive cryptocurrency projects in terms of partnerships and working products. Most notably, the Factom blockchain protocol is utilized by the U.S Department of Homeland Security and the Bill and Melinda Gates Foundation. 

Also, in September 2018, Factom’s blockchain data was accepted as evidence in a legal complaint filed by the short video app Douyin, also known as TikTok.

Factom Partnerships

U.S Department of Homeland Security
Factom is working with the U.S Department of Homeland Security to help them create an identity log that captures the identification of a device, who manufactured it, lists of available updates, known security issues and authorities granted access while adding the dimension of time for added security. Essentially, they want to use Factom’s blockchain technology to secure the Internet of Things (IoT) data and awarded Factom $192,000 to help them.

Bill and Melinda Gates Foundation
Factom was awarded two grants from the Bill and Melinda Gates Foundation to build a proof-of-concept prototype of a digitized medical records system for people living in developing countries.

Equator
Equator, an Altisource business unit entered an agreement with Factom to integrate the Factom Harmony blockchain-as-a-service (BaaS) platform into the Equator BaaS PRO solution.

Factom Enterprise Solutions and Products

Factom's products and enterprise solutions help their partners interact smoothly with data as well as preserving its integrity. Factom's products plug into existing systems with proven Factom technology that can be deployed quickly and adapt to any domain.

See Factom’s most notable enterprise solutions/products below:

• Signed At Source -Cryptographically accelerated IoT security
• Factom Enterprise API
• Factom Harmony Connect
• Factom Protocol for Kofax
• Blockchain proof for any application
• Factom® Protocol for Alfresco

Moreover, Factom’s latest project/collaboration with PegNet (PEG) may very well be the most promising solution built on top of Factom.

PegNet provides a decentralized, non-custodial network of tokens pegged (stabilized) to different currencies and assets to allow for the trading and conversion of value without the need for counterparties. This solution is much needed in the crypto and digital asset industry and could drive demand for FCT.

Conclusion

Factom has generated a lot of buzz in the cryptosphere for its impressive partnerships, extensive use cases, and real-world working products. The Factom (FCT) cryptocurrency is an OG project that has survived the market booms and busts, coming out stronger after each cycle. 

With continued development and growth, we can expect to see Factom remain relevant and experience growth for years to come. After all, the Factom protocol is already being utilized by notable enterprise businesses and governments. Therefore, when blockchain adoption finally picks up steam, Factom may very well lead the way in terms of adoption of their blockchain data integrity solutions.

What do you think about Factom (FCT)? Will the price of FCT bounce back when blockchain becomes more widely adopted? Let us know what you think in the comment section below.