What is Factom?
Those in the cryptocurrency world know that every altcoin and its grandma’s dog is claiming to ‘solve the problems of bitcoin’: the low transaction speeds, the high expense at volume and so on. Nevertheless, bitcoin remains dominant while the newcomers vie for second place. So, what does the blockchain-based Factom platform (and its coin: Factoid) have that actually resolves these issues? What makes it any different from its competitors?
Quite a few things, actually. Unlike many altcoins that propose some grand concept to totally revolutionise the cryptocurrency market (and capitalism, politics, democracy and world hunger while they’re at it) Factom (from the Latin for “anything stated and made certain”) doesn’t have any drastic new schemes up its sleeve. Instead, it proposes a lot of very simple ‒ and rather compelling ‒ solutions to bitcoin’s limitations.
The Factom platform is anchored to the bitcoin blockchain, so benefits from the security of its hash. However, it secures its data by publishing either encrypted data or, alternatively, an individual, cryptographic ‘fingerprint’ of this data to its distributed blockchain. This chain is immutable: there will be no forks in the road ahead. Because Factom is open-source (described by its creators as a “publishing and auditing engine”) it permits users to add to its ledger ‒ charging a small fee for the privilege. Once added, this data cannot be removed. The Factoid token is rewarded to users for participation on the blockchain.
The overarching vision here is all about truth and transparency. This is a platform dedicated to ensuring data is permanently and totally accurate and verifiable. So, it all sounds very sensible and straightforward, but is Factom an investment opportunity worth your time and money?
Can I Mine Factoid?
So this is a platform based on the bitcoin blockchain, which means you can mine for Factoids, right? Well ‒ no. The creators of Factom have identified mining as part of the reason for bitcoin’s currently critically low transaction speeds and spiralling cost. Therefore, Factom opts for a consensus algorithm, which is claims is faster and cheaper to maintain, as well as being better suited to a publishing platform. However, the anchor in bitcoin does mean that Factom cannot change its history ‒ there will always be the public ‘bitcoin standard’.
Value of Factom
Considering that Factoids are not a ‘true’ currency in the manner of bitcoin, their actual market value is quite impressive: which only goes to prove the potential of the Factom protocol. At the time of writing, the tokens are trading for $17.10 USD each, and have undergone a small dip in the last few weeks. The market cap, however, is pretty low at $149,498 USD, reflecting the relatively low circulation of the token at present, which in turn is evidence of the involved process of creating them.
This can be done in two separate ways. Firstly, you will be rewarded with Factoid tokens for participating on the blockchain by adding data. If you work in banking, for example, and routinely handle large databases, this will be a good idea regardless, and might net you some tokens while you’re at it! Secondly, early adopters at Factom’s launch were rewarded with a temporary Entry Credits that are now exchangeable for Factoids.
These methods obviously mean that the number of Factoids presently in circulation is limited, reflecting the fact that this token is not intended as a ‘true’ currency, but as an incentive to encourage development of the blockchain and the promotion of greater data validity, checkability and transparency.
How to Buy and Trade Factoid Online - Step-by-Step Guide
There is no way to buy Factoids outright if you missed the ICO. However, a number of popular exchanges like CEX.IO, Kraken and Bittrex allow you to trade other cryptocurrencies for it. Using Bittrex as an example…
- Get over to bittrex.com and set up an account. You will need to give all of the standard personal details including a name and email address, your date of birth, your location and a preferred payment method. If you wish to trade at higher limits, the platform might request that you provide a proof of identification (such as a passport scan).
- Once that’s all set up, click “Wallets” (found in the top menu bar). You can then deposit fiat, that can be used to obtain any popular cryptocurrency – bitcoin for example. One you have funds, Click on the plus button. An address will then appear: copy it. You can use this to transfer cryptocurrency from your Bittrex balance to any other exchange or wallet.
- After getting your funds set up, get over to the markets and click on FCT to see how Factoids are faring against other coins, tokens, instruments or fiat currencies on the market. You will be able to trade against a number of these.
- Factoid’s spread can be located on the right of the market chart. Additionally, you will find the 24-hour high and low.
- You can begin buying and selling using the fields underneath the chart. To set up an order above or below the current market price, simply enter the level at which you are happy to buy/sell and select “Good ‘Til Cancelled”. The sale or purchase will be made automatically as soon as your price is reached.
Is Factom more secure than bitcoin?
Bitcoin is very secure: with a massive public ledger. However, not only does Factom anchor itself to this ledger, but also to a number of others. Moreover, it employs a distributed mechanism to secure any data entered into its blocks. This data then becomes independently auditable and verifiable, creating a mathematically sound notarisation service that will be of particular utility for business applications. Indeed, the creators suggest that businesses might be able to eliminate central servers altogether in favour of Factom, by creating an immutable audit trail and offering a mechanism for communicating any changes to a system.
In effect, Factom offers a neutral ‘third-party’ than forbids any parties from making changes to a ledger or shared system. Neutrality is ensured because of the platform’s decentralisation: nobody ‘runs’ Factom, but a distributed protocol run through software used by many people at once. In short, Factom has all of the security of bitcoin, and builds on it: without any cost to speed or additional computational burdens.
What Is Special About Factom?
You might be thinking that this all sounds suspiciously like a glorified sidechain to bitcoin, but that is not the case. A sidechain operates by moving a coin’s value off its blockchain. Factom instead shifts non-value transfer options away from the bitcoin blockchain, checking itself against bitcoin at ten minute intervals. It is better thought of as an augmentation to the bitcoin blockchain that provides additional means for entries in the chain to be examined and their validity determined.
The platform actually adds very little data to the blockchain, but stores data in its own structures to be shared and secured like torrent files over a distributed hash. Even if Factom (or, god forbid, bitcoin itself) one day cease to exist, users can validate their data by retaining a copy of it to check against the historical ledger.
Factom also places a high emphasis on user anonymity, operating as a trustless ledger technology. Institutions as far-ranging as schools, hospitals, prisons and banks will be able to store information using this platform without fear of loss or alteration. In short, there is a huge amount of potential in this platform.
Future of Factom Trading
The high potential applicability of Factom means that its future looks extremely bright: it has even been researched for its applicability in smart cities! At the moment, Factoids have fairly low value, but that is entirely to be expected: they’re not a true currency like bitcoin, but a token to reward users for contributing to the blockchain. And the advantage of their low market value is that there is very little incentive for hackers to try and pull an Ether heist on Factom.
If there is an immediate disadvantage of Factom, it is that it does not befit the impatient. This will not be an immediate money-spinner, and neither is it based on a lofty overarching concept like the Internet of Things or distributed alternatives to the internet. However, the really exciting thing about Factom is its potential ubiquity. The protocol is so straightforward and cheap to implement, that it could soon become a standard security layer for ensuring data integrity. Support from the likes of noted venture capitalists like Tim Draper (who led a $4.2m capital raise for the project) and interest from the US Department of Homeland Security are also not to be ignored.
How to Buy Factoid with Credit Card
You cannot buy Factoids outright: you will first need to buy a popular cryptocurrency like bitcoin or Ether, then get over to an exchange and trade for it. Fortunately, the tokens are supported by several credible exchanges, including CEX.IO. This platform permits users to buy Factom on credit cards or debit cards. In fact, these payment methods are required for deposits below a daily limit of $300 and a monthly of $1000.
Getting fiat into to your balance using a credit card is very easy: it works in much the same way as a bank transfer from a linked account. All you have to do is select your brand of credit or debit card as your preferred payment method, and enter your details. Please be aware that deposits made in this way will incur a small fee. At CEX.IO the commission rate is 3.5 per cent. On the plus side, purchases made using credit or debit cards are quicker than bank transfers and spare you long, tedious waiting periods for transactions to clear.
How to Buy Factom with PayPal
If you are a US citizen, create an account at Coinbase. The platform is currently offering PayPal support to users from this territory as part of a beta phase, with a promise that the option will be rolled out to the rest of the market at a later date.
For users hailing from the USA, you have the option of linking your PayPal directly account to the Coinbase platform. You will have to verify your PayPal account with Coinbase however, as it must be added manually as a payment method. Please be aware that, this service is only for withdrawals. Any fiat made from cryptocurrency trading will transfer directly to your PayPal balance rather a nominated bank account.
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