Why Factom anchors into Bitcoin

11th June 2018

Factom is a publishing platform built specifically for data that enables proof of process and auditing. Every 10 minutes, Factom anchors a merkle proof into the Bitcoin blockchain via OP-RETURN. In the coming months, Factom will also anchor into Ethereum. The consensus algorithm Factom employs is what will allow it to scale to be a global utility for data integrity. If Factom used Proof of Work (PoW) like Bitcoin or was distributed computation like Ethereum, this would not be possible. Factom’s consensus algorithm ensures that all actors are acting properly in real time. Factom utilizes the Bitcoin blockchain (and soon Ethereum as well) to ensure that data is immutable; i.e. not reversible. By leveraging currently existing blockchains to provide the security, Factom is able to maximize the utility of the protcol. To use an analogy, Factom hires the best, most secure, most trustworthy auditing firm in the world to oversee its data so that everyone knows they can trust it. Think of Factom as a global Excel Spreadsheet on steroids everyone can trust. Without computers and all the security associated with them (Bitcoin,) that Excel Spreadsheet would be useless.

In addition, bitcoin spends millions of dollars every day for the security created by the Bitcoin miners. By anchoring into Bitcoin, Factom gains that same security for its historical immutable records, at a rate of $30 per day as of this writing. That means that instead of paying utility bills for security the way Bitcoin does, Factom can use its minor inflation to build both its infrastructure and ecosystem. Even if Bitcoin fees rose to $100 per transaction, anchoring fees using Factom would only be about $14,000 a day; over 70 times cheaper!

This feature, coupled with many more thoughtful characteristics make Factom the best designed token on the market. Not only is it the best blockchain for business, but we expect it will become the global data integrity and identity security protocol.