Factom plans to use the funds raised in the token sale to continue development of its data application layer on top of the Bitcoin Blockchain.
Over 4 million of the Factoids have been sold since the sale started on 31st of March 2015. Factom and cryptocurrency crowdfunding platform Koinify have called it a software token sale. Purchasers of Factoids can exchange them for “entry credits” to get access to the Factom software.
Kirby described the open source software tokenization process:
I call it the Linux with the Linux coin strategy. In the tokenized software, now you have an incentive for the people who build the software.
A factoid is just something that will allow you to write into the protocol.
The system will allow Factoids to go up and down in value while the “entry credits” will remain static in value.
Kirby, who was an Inside Bitcoins keynote speaker, added:
The more entry credits that are purchased the more factoids theat disappear from the system. So we have a scarcity model.
The utility of it drives the value of it. That is the magic.
Under the terms of purchasing Factoids, purchasers don’t really have ownership in the company or its software but they have access to the software. Factom is hoping that demand for access will drive the price of Factoids.
We don’t get a dime until the first milestone. That first milestone is a working system with the Factoid chain.
Koinify has done a beautiful job to curate the industry. Obviously they have worked their butts off to help us get ready for the sale.
Factom’s strategy of building another layer on top of the Blockchain seeks to avoid the data bloat of the Blockchain.
Kirby discussed the Blockchain bloat and Factom’s solution:
The big problem is that you only have seven transactions per second in Bitcoin. There are all kinds of cool things we want to build upon it. But there isn’t enough space.
If I am going to run a decentralized exchange, I don’t want to put it on the Blockchain. I want to do it on a data layer on the Blockchain. Because it is faster, it is cheaper, and there is room for it.
This is how blockchain technology needs to evolve using the bitcoin blockchain as a security layer and then build additional layers on top of it. A data layer, a storage layer, a computing layer, an Internet of Things layer
The whole point of what we are doing with Factom is that we are building a consensus model. We built this to be scalable for data rather than just financial transactions.
Factom is discovering new potential use cases for its platform that include a communication audit layer, real time privacy audit, health and land title records storage, and shipping container tracking platform.
Factom recently announced partnerships with medical records solutions provider HealthNautica and fiat currency digitization platform Tether.
The partnership with HealthNautica to secure medical records and audit communications between medical professionals will probably be one of the first non-financial Bitcoin Blockchain projects.
What we are building with them is a tool for auditing every bit of communication between medical professionals.
With their partnership, Tether plans leverage Factom’s technology to enhance their transparency and audit trails in its asset allocation strategy.
Factom has also be actively conceptualizing how to utilize its data application layer on the Blockchain for tracking logistics. They plan to use a Blockchain logistics application to track shipping containers around the globe.
That is really the power of the Internet of things. Put a sensor on a shipping container and track it throughout the world on a distributed ledger that nobody owns. That way Samsung doesn’t have to manage the data for 20 years.
Kirby also often talks about another application that could be hosted on the application layer – a land title records management system.
The power of the blockchain allows you to build immutable records. This provides opportunity to provide tamper proof title records.
Factom decided to go with a Bitcoin Blockchain platform rather than alternative blockchains or protocols because it has been around the longest and thus is a more proven technology. Nonetheless, if a better blockchain emerges, it is feasible to transfer its technology and application layer on that new distributed ledger.
Founded by Paul Snow, Brian Deery, Jack Lu, David Johnston, and Kirby, the Factom project began in 2014 and released its White Paper in November 2014. Snow is the CEO of Factom and the creator of the distributed autonomous protocol that adds the data layer to the Bitcoin Blockchain.