This episode of Blockchain Token – What is it? gives you the rundown of Factom!
Factom is based in Austin, TX, and its primary purpose is to preserve, ensure, and validate digital assets. Factom is a record keeping network on the Bitcoin blockchain. It creates permanent records that cannot be changed later, and hopes to solve some problems in the Bitcoin network.
Factom attempts to solve three main problems seen in the Bitcoin network:
- Speed – Bitcoin transactions take at least 10 minutes for a single confirmation. With a community standard of 6 confirmations before a transaction is fully processed, many transactions take over an hour to be validated.
- Cost – Bitcoin transaction fees have been increasing and may continue to do so as more transactions enter the network.
- Block Size – With 1MB block sizes, the number of possible transactions per second is capped. Even the implementation of Segregated Witness (SegWit) and the Lightning Network may not be enough of an improvement to curb Bitcoin’s scaling issues.
Factom actually uses two tokens as part of their network: Factoids and entry credits. Factoids are rewarded to those who help maintain the network, and entry credits can be bought with Factoids. The price of Factoids is directly tied to the amount of data added to the network.
You need entry credits in order to put data onto the blockchain. It would be fair to say that Factoids are the main currency, while entry credits are more of a utility token. Entry credits get turned into hashes, and while there is a size limit to each entry, you can use multiple entries to make sure all your data gets onto the chain.
The system uses three types of servers to maintain the network. The data is then written to a “federated server,” the only servers that can write data to the blockchain. The data is checked by audit servers, and follower servers are used simply to look up information, like a search engine. The design of this ecosystem helps address the issues that Factom sees with Bitcoin network.
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