Last update – 05/07/2017

Factom has been among us for quite awhile now. Here are some reasons why it is by far the best buy in the cryptosphere currently.

The Team

Factom hasn’t been developed in a garage as have most of the tokens we’re familiar with. Its development is back by a solid team, both on the business and IT side. Its members have strong ties in the business world, and know how to canvas new clients. Below are some of their achievements to date—it is inspiring. It’s also worth noting that Factom has offices not only in the US, but also Shanghai, Beijing, and London.

Factom – ELI5

Let’s begin by quoting Factom’s CEO, Peter Kirby:

“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.”

Factom allows its user to secure a fingerprint/hash of the data from a given file in any block chain. This way, at any time in the future, users can check with absolute certainty past properties of a file, document, database, etc.

One use-case is storing the financial data of a company in the Bitcoin block chain. Data stored in an immutable, decentralised ledger is impossible to falsify afterwards, and the result can be easily verified. Today, this information is usually stored in centralised databases, which leads to costly compliance and auditing processes, and opportunities for data to be corrupted, mismanaged, accidentally or intentionally altered, etc.

You get the idea, right? With Factom, once it is secured, it’s secured for good!

Big Investors

Factom raised a total of 8 millions dollars in April 2017 from various high-profile investors. It had initially raised 5.3 millions dollars in its Series A funding, which occurred in October 2016. However the company is so appealing that private investors were compelled to increase their investment in Factom. Among the investors, we find:

Tim Draper – Billionaire investor extra-bullish on the cryptosphere – he’s waiting for Bitcoin to reach 10k/coin

Stewart Title, Overstock, Fenbushi Capital, and Plug & Play

Additional investments in Factom have come from notable funds such as Peeli Ventures and Harvest Equity.

Grants & Current Contracts

Factom has been successfully aggressive in its quest for partnerships, grants and clients. Below are some of their largest wins to date.

Bill & Melinda Gates Foundation

Yes, you read that right, the Gates Foundation has granted 500k USD to Factom to finance a project aiming to digitize medical records systems for individuals living in remote developing areas of the world.

Department of Homeland Security (DHS) Science & Technology Directorate (S&T)

Last year the United States DHS granted Factom 200k USD to authenticate devices to prevent spoofing and ensure data integrity. That Proof of Concept (Phase 1) was a success, and now Factom is working on Phase 2 of a prototype, made possible by a second, follow-on grant from the DHS. We are talking about security of the full US CCTV system, right? This has just insane potential.

Smart Cities in Mainland China

China is a huge country with more than one billion citizens, and they are developing their smart city initiative at a rapid pace. A smart city generates an enormous amount of data—supporting hundreds of millions of people—that needs to be secured and immutable. And Factom now has a contract with China to secure this huge amount of data using its protocol.

WanCloud Platform in China

As mentioned earlier, Factom already has a CEO in charge of their Chinese division. In addition to the smart city initiative, Factom now has a broad gateway to the Chinese market of data security through its partnership with WanCloud platform, developed by the multi-billion dollar Wanxiang Group. As mentioned with the smart cities, China has billions of people, with a very active and growing economy. It is probably one the best market to be in, and Factom is there in force.

Current Products Already Available

All of the above is in the proof of concept stage, but Factom is one of the very rare crypto projects that has already moved beyond POCs into current, real-world use.

Harmony

If I mention to you data, gigantic amount of data, modified or added every day, whose security is essential to our economy, you say, you say … Finance. Banking industry. And you are right. Factom has developed a tool to ensure security and integrity of the whole mortgage industry; it is called Harmony. During the 2008 crisis, banks bought each other, had to merge huge amount of data in the process, and thousand of documents were lost. It literally cost the banks billions. With Harmony, this mortgages data is entered into any blockchain—immutably, and forever. Harmony in 2008 would have saved the banks BILLIONS. I’ll let you check this video from Kirby, CEO of Factom. He clearly says that at least three large—“very, very large”—financial institutions are already in the process of signing contracts with Factom. And this is just the first round of financial clients for Factom.

Remember Ripple and its 15 billion market cap, because it solves a world class issue, sending money across the globe? Factom solves issues of the same magnitude, and its market cap is only 80 million: 180 times less. See the investment potential?

Smartrac – dLoc

Smartrac is a company specializing in RFID chips. They have developed a chip that can be placed on any product, and from which we can store and read data. Basically, thanks to these chips, you can create the history of any object/document’s properties! The specific technology is called dLoc. It allows one to create/read the data associated with thane object or document, and they have selected Factom to ensure the integrity and security of that data. Basically Factom’s protocol works with Smartrac, through dLoc. This is the perfect gateway for very broad usage of the Factom protocol. These chips can be used anywhere—and will increasingly be used everywhere.

Example: in your favorite shop, you want to buy a steak, but you are picky about the quality. With this kind of chip present at the counter, a quick check from your smartphone would allow you to track the entirety of the production cycle, from the date of birth, to the type of grass the animal consumed, to the slaughter house where it was processed. This technology, enabled by Factom, opens up a whole new level of transparency, data accessibility, and provable authenticity.

Acolyte

As the era of smart contracts arrives, Factom has made sure to provide a secure way for Oracles to provide their data. Oracles are the source of an outcome from the real world that should have an impact on smart contracts. Factom developed Acolyte to ensure that data is communicated in a transparent and secure manner from the Oracle to the smart contract.

Inner Mechanism & Price Dynamic

Here comes the crispy part: How all of the above is converted into bullish price dynamics. What is the link between storing data in a block chain and the valuation of the Factoids?

Factom uses two levels of currency, the Factoids (FCT) and the Entry Credits (EC). Let’s give the numbers – 1 EC allows a user to store up to 1 kb of data in the blockchain. (Remember that Factom is blockchain-agnostic. Data can be stored in any blockchain – Bitcoin, Ethereum, Ripple, etc.) 1 EC = 0.001 USD*. You need to burn FCT to get EC. If 1 FCT = 9 USD—the price as I write this—then you can get 9,000 EC, enough to store 9,000 kb of data. There is currently 8.7 million FCT available. At current levels, we could potentially store 8.7 million * 9 USD / 0.001 = 78.3 Tb of data. Most FCT are in the hands of both speculators and the Factom team, as an incentive. So you can lower the number of purely available FCT.

New supply of FCT is scheduled for M3 (Milestone 3), which is due to be delivered in 12 to 18 months from now. 73,000 FCT will be mined per month after M3. In the meantime, the Factom protocol is fully operational, decreasing steadily the amount of FCT available.

If we summarize:

1 EC = 1 kb

1 EC = 0.001 USD

8.7 mln FCT with no inflation until M3

1 FCT burned gives you (FCT spot price * 1,000) EC

A substantial amount of the FCT is held and locked in traders/team’s hands

Example: A big bank has 1,000,000 clients. Every day the bank needs to time stamp the status of its clients’ accounts, in an immutable way, with the possibility of segregating that data afterwards. Let’s assume 1 EC allows one to store the data of 1 client. You need 1,000,000 EC = 1,000 USD = 111 FCT. Over a month time, 111 * 30 = 3,330 FCT are burned for this sole purpose. As the supply is 73,000, you need only 73,000 / 3,330 = 22 entities to operate at this scale to consume the full 73,000, causing the total number of FCT to shrink substantially. To this example, add the demand for FCT triggered by the Bill & Melinda Gates project, and also the DHS security project, the Chinese smart city initiative, the dLoc project, etc. And this is only the beginning!

Of course, this exercise is done by keeping the price constant. The huge amount of demand for FCT will make the price skyrocket. In fact it has to, in order to prevent deflation. Keep in mind that very large institutions are in discussions with Factom and about to sign contracts. Plus, the Harmony suite was probably made with the help of big actors in the industry to get a tailor-made product. (Factom has a number of former exec-level real estate movers on their staff.) The take-away is this: the more companies that use the Factom protocol, the higher the price of FCT must climb.

Important: You can get EC by two means. First option is to convert your FCT yourself into EC through the Enterprise Wallet. Second option is to use Factom Inc services. You can buy EC from them directly. The important thing is that BOTH solutions burn FCT. Even if big clients use Factom direct service to get ECs to store their data, the supply of FCT will decrease. Factom owns some FCT, and can also buy them on the market. Keep in mind that for EACH EC created, FCT need to be burnt.

* 1 EC = 0.001 USD, but if you use Factom direct services they will charge them 0.005 USD. You get the 0.001 USD if you process the FCT conversion into EC yourself through the Enterprise wallet.

Market Approach

Behaviour

I’ve followed Factom for quite awhile now—enough time see big players heavily accumulating Factoids. They know what they are doing and expect the same surge in FCT that we saw with Ripple. The squeeze of the weak hands are frequent and yet the price USD-wise remains stable overall, and steadily increasing. Only weak hands sell their stakes at this point, and there are fewer and few weak hands.

I plan to hold FCT long-term. Along with Ripple, Factom is one of the few crypto projects today that ACTUALLY solves a world-class problem—data integrity and immutability.

The Markets to Come

Factom’s dev team has worked hard to provide a stable network. Now, the job is done. We can expect—and it is in the pipeline, follow Factom’s Slack—to be listed on the Exodus wallet, and with no surprise, once it is done, on Kraken and other exchanges, giving a much higher visibility to the token.

In its article from 22/5/17, Jaxx – another universal Wallet that offers multi platforms interface – announced that it will shortly support FCT transactions. The more ways to store and trade Factoids, the more stable the price will be.

Miscellaneous

Wallets

Currently, FCT can be held on different places.

The Factom Papermill Wallet

The Factom Enterprise Wallet

And the different Market Places (mainly Poloniex and Bittrex)

If you have any difficulty to set up the Factom wallets, join the slack, the community will gladly help you.

Factom University

As the Factom structure is not easy to grasp at first sight, the team provides videos and tutorials to understand it. If you are interested by the mechanisms of the Factom protocol, you should definitely visit their Factom University. There are currently two sections: the first one is a course on the fundamentals of the block chain technology: the second one is about the Factom protocol architecture and processes. It is very well produced.

Articles

Bitcoin Magazine – Factom Harmony Takes On the Mortgage Industry

Econotimes – Factom among Gartner’s ‘Cool Vendors in Blockchain Application’

Reddit – Resources for People New to Factom

Ethnews – Details on the DHS Project

Hyperledger – Factom, a member of the Hyperledger Project

Youtube – How Factom Could have saved billions to BoAmerica

Factomize – How to Secure Your Factoids with Factom Papermill on Windows

Factomize – Paul Snow on Factom’s Scalability

vpnMentor – Using Blockchain to Help the Mortgage Industry – With Peter Kirby

Conclusion

Factom is a rare gem in the cryptosphere, solving an already-existing worldwide problem—data integrity. It doesn’t create a new market with a highly speculative outcome. No, the need for a protocol like Factom is already there, and Factom delivers. We saw that the price of FCT will surge as the tokens supply becomes deflated through network use. This, combined with all the exciting projects Factom is already a part of, has resulted in the catalyst for a multi-billion-dollar market cap for FCT. If you missed Ripple’s price surge, try not to miss FCT’s imminent launch.

Advise: If you want more details on the EC/FCT relation, please read this article.