[ANN] FACTOM - Introducing Honesty to Record-Keeping

[FACTOM]

This post and much of the thread's content is out of date. Please refer to this new thread for up-to-date information on the Factom protocol.

INTRODUCING HONESTY TO RECORD KEEPING

Factom is a system for securing millions of realtime records in the blockchain with a single hash. This gives you the tools to build applications with all of the security of the blockchain without the speed, cost, or size limitations. Our goal is to involve the Bitcoin and Crypto community to engage with us, look at our work, and collaborate with developers across the industry and beyond. Factom is a next generation platform for creating enterprise tools and applications using Blockchain technology. Factom allows you to build applications on top of the Bitcoin blockchain. Factom uses a simple API that lets you build projects that were not possible   before while still harnessing the trust and security of the Blockchain. Factom is a solution to: Blockchain bloat Off chain transactions Use cases and project ideas for hashing data into the blockchain In a nutshell, what is Factom? Factom is a system to record entries in a way that makes the list unique (everyone gets the same copy) and allows anyone to add to the list, but does not allow anyone to change entries once they are in the list. As a designer of business applications, why should I consider using Factom? Factom is a method of creating an immutable audit trail. It is also a mechanism to communicate changes in a system. If your application needs a central server to coordinate processes, you might be able to eliminate the central server in favor of using Factom. Does Factom use a cryptocurrency? Yes. You can use Factoids (the Factom currency) to purchase Entry Credits with a simple transaction. The protocol does the conversion, so you effectively purchase the Entry Credits from the protocol. You assign those Entry Credits to a public key. Who controls Factom? Factom is a distributed, decentralized protocol running on top of Bitcoin. That means nobody controls it, but that it is software that people all over the world run to make the protocol work. Factom.org is releasing and maintaining the software. But the software is open source, and anyone is free to use it for any purpose. With Factom is really possible to build safer and more secure record keeping on a truly global scale. There are three types of proof that allow Factom to do that: Proof of Existence: a document existed in this form at a certain time. Proof of Process: a document existed and is linked to this new updated document. Proof of Audit: an updated document can be verified to have changed according to a set of rules. Docs & Demos WhitePaper Consensus Mechanism Paper Draft Wiki FAQ Alpha API release (v0.0.2) Factom Explorer Partners & Collaborations Announcement - Video Announcement - Video Announcement - Video Announcement - Video Announcement - Video Announcement Announcement Announcement Announcement Announcement Announcement

Factom: A Data Layer for the Blockchain

Trust is a rare commodity in today’s global economy. Yet we must trust various parties to participate in this increasingly computerized marketplace. Until recently, electronic records have been particularly hard to protect, challenging to synchronize and difficult to verify, largely because computer records are so easy to change. We use heavy regulation to try and minimize failures, and massive insurance systems to pave over the failures that none the less occur. Then Bitcoin introduced the blockchain. A blockchain is a distributed mechanism to lock in data, making it immutable, verifiable and independently auditable. The Bitcoin blockchain was used to create a secure digital currency and payment system.     But think of the benefits if you could also use the blockchain to secure and verify general purpose data! Using Factom, you can. “Bitcoin is used to transfer value between parties. With Factom we can use this powerful ledger to secure general purpose data.” Factom is most easily understood as a protocol that provides unlimited books of blank paper. Users of the protocol can take a book, label it with the title of their choice, open the book, and write on a page. When that page is submitted to Factom it cannot be altered or deleted. Nobody can back-date a page. All the data written into the book is preserved in the order it was presented to the Factom protocol. “Factom does practically nothing. But by limiting itself to simply recording and securing data, Factom enables practically anything.” Factom was designed to scale. Just like you can go into a library and select only the books that interest you, Factom allows users of the protocol to select only the books of interest to their application. Users do not have to download and process the whole library. And again, Factom is like a library. A library can support the documentation of any information at all, from fiction and romance novels, to scientific journals and history books. Factom can also support any application at all that needs to document the past. All decisions are made based on data. To defend a decision, proof is needed of the data on which a decision is based. Factom becomes the technology applications can use to validate and verify the creative process of producing art, music, and literature. It becomes the technology that allows tracking of licensing of creative works. Factom can even be used to track their use. Factom becomes the technology to secure land titles. And it does so in a way that ensures the records belong to the people. The records cannot be changed or altered without in fact adding such changes to the book. This ensures a permanent record if fraud occurs. It is said that the winners write the history books. But Factom provides the seed for a technology that does not allow for the selective recording of the past, editing of the past, or inventing the past. Factom provides the means of creating records honestly and securely. The Factom Alpha API is available today, and many developers are beginning to work with it. Open source, cryptocurrencies, and distributed applications are changing the world. This is just the beginning of their ultimate applications. The most exciting days are still ahead! by Paul Snow - Founder & CEO, Factom

Official Videos and Use Cases

	What is Factom?	How Does Factom Blockchain Technology Work?
	Saving BoA $17 Billion	Unlocking $9 Trillion in Land Value
	Protecting Sony Pictures with Blockchain Technology	Factom Transforms KYC and Keeps Private Data Private

Interviews & Related Videos

Let’s Talk Bitcoin - October 27, 2014 The Bitcoin Game #2 - Factom Epicenter Bitcoin - November 9, 2014 EB52 – Paul Snow & Peter Kirby: Factom, Proof of Existance, Proof of Process, Proof of Audit Money2020 - November 12, 2014 Tatiana Interviews Paul Snow from Factom.org Decentral Vancouver - November 13, 2014 Salon Talks w/ Peter from Factom and Andrew Wagner of Bitcoin Magazine #BlockchainBloat   Bit n Mortar - November 18, 2014 Factom interview - Solves the Bitcoin speed problem / Proof of audit Phil Maher and Paul Snow - December 4, 2014 Factom Live Hangout - 12/4/14 - Denver Bitcoin Center Ed Eykholt and Peter Kirby - December 11, 2014 Factom Presentation at the Seattle Bitcoin Meetup Ernest Hancock and Paul Snow - December 30, 2014 Freedom's Phoenix: Paul Snow Interviewed by Ernest Hancock Bitcoinist.net - January 17, 2015 TNABC 2015 - PAUL SNOW COFOUNDER FACTOM Innovating the Blockchain MadBitcoins - January 23, 2015 MadBitcoins interviews Paul Snow from Factom #BitcoinMiami2015 Chris DeRose - January 25, 2015 What is Factom? An interview with Paul Snow Coin Republic - February 2, 2015 Blockchain based document proof system Factom, at the Bitcoin Singapore Meetup in Hackerspace World Crypto Network - February 3, 2015 "Honesty is Subversive" - Interview with Paul Snow from Factom Decentral Vancouver - February 21, 2015 Salon Talks: COINFEST 2015: Vanbex Edition! Synereo, Factom, Trustatom, Etherparty, Opalcoin Bruce Fenton - February 25, 2015 Paul Snow explains Factom at the Dubai Bitcoin Conference Bruce Fenton - February 25, 2015 David Johnston Bitcoin and history and the future of the blockchain Factom Hangout - March 9, 2015 Tether + Factom Collaboration Announcement Factom Hangout - March 10, 2015 Serica + Factom Collaboration Announcement Factom Hangout - March 10, 2015 Factom Talk With D.C. Bitcoin Meetup World Bitcoin Network - March 10, 2015 Bitcoin 101 - A Million Killer Apps - Part 2 - Blockchains & A Global Shared History Factom Hangout - March 11, 2015 Coinapult + Factom Collaboration Announcement Factom Hangout - March 12, 2015 Tradle + Factom Collaboration Announcement Bitcoinist.net - March 13, 2015 Inside Bitcoins Berlin 2015 - Day 1 - Peter Kirby Factom Hangout - March 24, 2015 Texas Bitcoin Conference Hackhaton Developer Q&A

Factom in the News

The Wall Street Journal - November 5, 2014 BitBeat: Factom Touts Blockchain Tool for Keeping Record-Keepers Honest Bitcoin Magazine - November 6, 2014 Ensuring Network Scalability: How to Fight Blockchain Bloat Omni Foundation Blog - November 9, 2014 FACTOM – SIMPLE YET CRITICAL TECHNOLOGY ON MASTER PROTOCOL CoinTelegraph - November 13, 2014 This is How Factom Can Solve Blockchain’s Bloat AND Scalability Issues CryptoCoins News - November 17, 2014 FACTOM WHITEPAPER RELEASED: NEW SERVICE LEVERAGES BITCOIN BLOCKCHAIN CoinDesk - November 18, 2014 Decentralised Apps Promise New Way of Doing Business Online CoinDesk - November 19, 2014 Factom Outlines Record-Keeping Network That Utilises Bitcoin's Blockchain Brave New Coin - December 19, 2014 Factom: Digital Fingerprints Tackling Banking Fraud CryptoCoins News - December 21, 2014 WATCH A BLOCKCHAIN COMPANY SAVE BANK OF AMERICA $17 BILLION (HYPOTHETICALLY)       TechCrunch - December 26, 2014 Bitcoin 2.0 And Tokenizing The User Experience AllCoins News - January 3, 2015 Q&A With Factom’s Peter Kirby – Scaling Blockchain Tech for Robust Applications CoinDesk - January, 3 2015 Crypto 2.0 in 2015: Turning Bitcoin Theory Into Big Business CoinDesk - January 4, 2015 19 Crypto 2.0 Projects to Watch in 2015 Inside Bitcoins - January 5, 2015 Bitcoin 2.0: One World, One Cryptocurrency Is ‘Unrealistic And Counter Productive’ Inside Bitcoins - January 9, 2015 How Blockchain Technology Could Revolutionize the $1.1 Trillion Insurance Industry Crypto Articles - January 11, 2015 Coin Proz co-founder Tim Frost: 2015 can be the defining year for Bitcoin FuzzieLabs - January 13, 2015 Blockchain: The real gold behind Bitcoin CryptoBiz Magazine - January 2015 Issue Factom CoinDesk - January 18, 2015 TNABC Day 1: Bitcoin Industry Undeterred Despite Price Decline O'Reilly Radar - January 21, 2015 The 3Ps of the blockchain: platforms, programs and protocols CoinsSource - January 31, 2015 Blockchain Brings the Internet of Things Financial Times - February 3, 2015 Bitcoin: possible bane of the diamond thief CoinDesk - February 15, 2015 Factom is Serious About Stopping Smart Dishwasher Fights WSJ MoneyBeat - February 19, 2015 BitBeat: Dell Takes Bitcoin Into Canada, the U.K. NewsBTC - February 26, 2015 Bitcoins and Factoids: a Symbiotic Relationship NewsBTC - March 3, 2015 EXCLUSIVE: Interview with Peter Kirby, Factom President Bitcoin Magazine - March 9, 2015 Tether + Factom Announce Collaboration Bitcoinist.net - March 9, 2015 Factom And Tether Announce Partnership Bitcoin Magazine - March 10, 2015 Serica + Factom Announce Collaboration BTCFeed - March 11, 2015 Factom, Build Applications On The Blockchain Bitcoinist.net - March 13, 2015 Tradle and Factom: Delivering Blockchain Economies Of Scale CoinReport - March 14, 2015 Factom, Tether collaborate on wallet transparency, hedging plan Bitcoinist.net - March 15, 2015 [VIDEO] Factom Partners With Coinapult As It Preps Software Sale CoinDesk - March 16, 2015 Factom Announces Launch Date for Token Crowdsale Business Insider - March 23, 2015 The 25 most exciting bitcoin startups Brave New Coin - March 25, 2015 Factom and Coinapult Partner For Token Sale AllCoins News - March 26, 2015 Vaultoro, Factom Partner to Offer More Gold Market Transparency Bitcoinist.net - March 26, 2015 Factoids: The Tokens that Drive the Factom Protocol

Get in Touch

FACTOM.ORG

[CanaryInTheMine]

Glad to see you've released your whitepaper... Hopefully you are getting good feedback from reviews.

[The Bitcoin Co-op]

We're talking about Blockchain bloat and beaming Peter Kirby (President of Factom) to our Meet Up at Decentral.Vancouver on Thursday: http://www.meetup.com/decentral-bangtown/events/218623952/

[starsoccer9]

Cool project, I may be getting involved in the crowdsale

[fordlincoln]

Found Factom in Chinese https://bitcointalk.org/index.php?topic=869217.0

[dansmith]

So FACTOM servers aggregate the hashes from all of their clients into one megahash and commit it to the blockchain every 10 mins while giving cryptographic proof to each client that their hash was indeed included into the megahash?
This is a nice way to cut costs for your clients, albeit your solution has a single point of failure - FACTOM servers. Still some gov and corporate entities may be interested in using your service.

What I did not immediately understand after looking at the paper is why you need your own coin and your own chain?
Can't FACTOM be a subscription-based service where you hand out API keys to your clients to push the hashes to your servers?

[fordlincoln]

So FACTOM servers aggregate the hashes from all of their clients into one megahash and commit it to the blockchain every 10 mins while giving cryptographic proof to each client that their hash was indeed included into the megahash?
This is a nice way to cut costs for your clients, albeit your solution has a single point of failure - FACTOM servers. Still some gov and corporate entities may be interested in using your service.

What I did not immediately understand after looking at the paper is why you need your own coin and your own chain?
Can't FACTOM be a subscription-based service where you hand out API keys to your clients to push the hashes to your servers?

Great points - Factom network has its own access token to prevent spam (just like Ether to Ethereum). The Factom servers will be a distributed model designed to only process Factom transactions. The purpose of Factom is to provide DApps/Dacs/DAOs/Data processing companies or even Transaction processing systems like back-end exchange platforms, with the benefits of using the Blockchain technology, but without the time and data constraints of the Bitcoin Blockchain.

Factom can support a subscription service where people can use an API to send their data, that is certainly part of the vision - the hashing of the data itself can be done client-side and would then be rehashed by Factom to compile into a Factom block.
 
Thanks for reading the whitepaper

[fordlincoln]

So FACTOM servers aggregate the hashes from all of their clients into one megahash and commit it to the blockchain every 10 mins while giving cryptographic proof to each client that their hash was indeed included into the megahash?

also, Factom Blocktimes are not restricted by 10 minutes

"Factom Blocks – where the Merkle roots from Entry Blocks are entered to form another Merkle tree with a final Merkle root, which is computed every one minute and inserted into the next Bitcoin block roughly ten at a time"

http://cryptobizmagazine.com/the-facts-on-factom/

[coin@coin]

Glad to see the Factom Project progress! Also nice to see collaboration with other personalities in the space to advise on a well written whitepaper!

[AlanX]

So FACTOM servers aggregate the hashes from all of their clients into one megahash and commit it to the blockchain every 10 mins while giving cryptographic proof to each client that their hash was indeed included into the megahash?
This is a nice way to cut costs for your clients, albeit your solution has a single point of failure - FACTOM servers. Still some gov and corporate entities may be interested in using your service.

What I did not immediately understand after looking at the paper is why you need your own coin and your own chain?
Can't FACTOM be a subscription-based service where you hand out API keys to your clients to push the hashes to your servers?

Decentralized autonomous applications for the most part require their own token, if the actions of one party in the application obligate the protocol to provide services.

So let's use Factom as an example.  At first, it would seem that anyone placing an entry into Factom could use Bitcoin to pay for that entry.  But that means there would be a Bitcoin transaction for every transaction in Factom.... That would bloat the Bitcoin blockchain just as much as putting hashes directly into the Bitcoin blockchain, and it would require a Bitcoin transaction fee for every entry PLUS the Factom fee, so that fails as a solution.

But what if you use Bitcoin to purchase a bunch of entries.  That would solve the bloat problem and the cost problem.  A user could buy say 100 or 1000 entries in Factom, then use them up within Factom, then buy some more, then use them, and so forth.  But now we have to figure out who the user buys those entries from.   Is there a special owner of Factom?  Or could just anyone sell these entries?  And if just anyone can sell these entries, then why buy them from someone else?  Why not just buy them from yourself?

So the way that Factom allows the selling of those entry rights is to issue and support our own token, the Factoid.  Servers and auditors that keep the system running are rewarded Factoids for maintaining the system.  Those Factoids can be converted into Entry Credits, so anyone holding Factoids can in fact provide a "Store Front" service for Factom users.  The "Store Front" can accept Bitcoin, convert Factoids into Entry Credits, which get assigned to the public key of the Factom user buying those credits.

The User never has to see a Factoid.  The User can pay Bitcoin (or even dollars) to a Store Front that in turn provides the User Entry Credits that can be used to put entries into Factom.

In other words, these Factoids represent an potential obligation of the Protocol to provide a limited amount of processing (i.e. adding entries into Factom).  Factoids can be freely traded.  Anyone with Factoids can use Factom, but more importantly, anyone with Factoids can allow someone else to use Factom.

An application coin simply represents a limited obligation of a Protocol, rewarded to someone for providing support for the protocol.  Distributed applications will almost always require a token if the application requires something more complex than a simple fee for service to drive the application.

[dansmith]

Thank you for your informative responses.
@AlanX, you suggested that buying 1000s of entries in Factom with BTC can prevent the bloat&cost problem and I agree.

However, IMHO it would be possible to achieve the same by having colored Factom tokens (colored as in colored coins).
The would-be user of Factom sends his tokens into a m-of-n threshold signature Bitcoin address controlled by the Factom miners (miners' address).
There will be only one miners' address into which ALL users must deposit their Factom tokens. Signatures made by the privkey of the address from which a user funded miners' address will be used to uniquely identify each Factom user.
The miners must themselves keep track of how many tokens have already been spent by each user.
The miners can have a policy of disbursing the already-spent tokens out of the miners' address at the end of each day.

The downsides:
Miners are not immediately rewarded but only at the end of the day.
Miners must keep track of colored tokens' movement on the bitcoin blockchain.

Have you considered this scheme?

[FACTOM]

Join Factom Founders on Hangouts tomorrow December 4th @Denver Bitcoin Center.

You are invited to join us at the Denver Bitcoin Center, if you can't make it you can tune in to the Google Hangouts at the below link.
Live stream starts at 7PM (MT).

https://www.youtube.com/watch?v=G6foiXEHvDA

[fordlincoln]

Thank you for your informative responses.
@AlanX, you suggested that buying 1000s of entries in Factom with BTC can prevent the bloat&cost problem and I agree.

However, IMHO it would be possible to achieve the same by having colored Factom tokens (colored as in colored coins).
The would-be user of Factom sends his tokens into a m-of-n threshold signature Bitcoin address controlled by the Factom miners (miners' address).
There will be only one miners' address into which ALL users must deposit their Factom tokens. Signatures made by the privkey of the address from which a user funded miners' address will be used to uniquely identify each Factom user.
The miners must themselves keep track of how many tokens have already been spent by each user.
The miners can have a policy of disbursing the already-spent tokens out of the miners' address at the end of each day.

The downsides:
Miners are not immediately rewarded but only at the end of the day.
Miners must keep track of colored tokens' movement on the bitcoin blockchain.

Have you considered this scheme?

Interesting but colored coins is not a protocol unlike Mastercoin/Counterparty - and Factom. Afaik Colored coins allows you to identify utxo outputs and 'color' them - I dont see how you would be able to achieve the same as what Factom is proposing.

It seems that your proposal is more cumbersome as it would involve - colored coins, multisig, and miners tracking tokens (something that would require coordination with miners and/or pools)

Factom addresses the bloat issue by hashing transactions offchain on Factom servers, hence the need for its own token.

[AlanX]

Thank you for your informative responses.
@AlanX, you suggested that buying 1000s of entries in Factom with BTC can prevent the bloat&cost problem and I agree.

However, IMHO it would be possible to achieve the same by having colored Factom tokens (colored as in colored coins).
The would-be user of Factom sends his tokens into a m-of-n threshold signature Bitcoin address controlled by the Factom miners (miners' address).
There will be only one miners' address into which ALL users must deposit their Factom tokens. Signatures made by the privkey of the address from which a user funded miners' address will be used to uniquely identify each Factom user.
The miners must themselves keep track of how many tokens have already been spent by each user.
The miners can have a policy of disbursing the already-spent tokens out of the miners' address at the end of each day.

The downsides:
Miners are not immediately rewarded but only at the end of the day.
Miners must keep track of colored tokens' movement on the bitcoin blockchain.

Have you considered this scheme?

I am not sure I understand, but it seems that the miners would have to actually send the tokens at the end of the day.  Are these Factom miners?  Because Factom doesn't have miners...  But even if they did, the miner would have to actually send the coins? 

What we are doing is completely automated. 

I have not considered this scheme,  but would be happy to if I could understand what problem you are solving here.

[FACTOM]

Watch Paul Snow on Hangouts for the latest Factom updates from the Denver Bitcoin Center. Click on the pic.  

[Nipperkin]

Use cases for Factom...this could get interesting!

How Factom Could Have Saved Bank of America $17 Billion in Fines
How Factom Could Have Prevented the $42.2 Billion BP Oil Spill
https://docs.google.com/document/d/1o4WR6U-ajYSczWp5yIhGSXfZCYKmyX-OTInI6ve9i0Q/

[dansmith]

I realized that I'll have to more carefully re-read the paper so I could establish some fundamental things before I re-visit my scheme with thresh.sig addresses.

1. Upon the initial Factoid distribution, you will start with a hand-crafted genesis block acc.to the distribution results?

2. Is a Factom Server expected to have its own btc in order to create an anchor on the btc blockchain?

3. Will it be the application's job to make sure that the anchor was placed on the blockchain, and if it was not placed there then rate the Factom Server unfavorably?

4. What is the process how the Factom Server will convert the Entry Credits back into Factoids?

5. Since the Entry Credits are paid to the Factom Server which creates the Entry Block, what is preventing a malicious actor who wants to spam the Entry Credits chain from setting up its own Factom Server and continually paying to it?

[dansmith]

A small suggestion to the whitepaper p.30 Dictionary Attack:

you can hash chainID together with salt. This will mitigate the Dictionary Attack.

[AlanX]

A small suggestion to the whitepaper p.30 Dictionary Attack:

you can hash chainID together with salt. This will mitigate the Dictionary Attack.

Very true.

[AlanX]

I realized that I'll have to more carefully re-read the paper so I could establish some fundamental things before I re-visit my scheme with thresh.sig addresses.

Upon the initial Factoid distribution, you will start with a hand-crafted genesis block acc.to the distribution results?

Is a Factom Server expected to have its own btc in order to create an anchor on the btc blockchain?

Will it be the application's job to make sure that the anchor was placed on the blockchain, and if it was not placed there then rate the Factom Server unfavorably?

What is the process how the Factom Server will convert the Entry Credits back into Factoids?

Since the Entry Credits are paid to the Factom Server which creates the Entry Block, what is preventing a malicious actor who wants to spam the Entry Credits chain from setting up its own Factom Server and continually paying to it?

To be a Factom Server, you have to have enough user votes to be one of the top n servers, where n is the number of Factom Servers.  So people can't just create their own servers.  All actions of a server must past muster with the rest of the servers, or a majority will vote you out of the pool.  So you cannot misbehave.  

Only one of the Factom Servers places the Merkle root into the blockchain, and that server is selected via a deterministic lottery (i.e.one of the hashes) so everyone can validate and verify the anchors.

Users will do validation based on their security levels.  

The consensus algorithm isn't well documented, but I am doing that now.

I hope this helps.