This article was first published on April 3rd in CoinTelegraph by Allen Scott.
“We have a goal to move the conversation about blockchain technology beyond financial tools.”
- Peter Kirby, Factom President
Factom is the first usable blockchain technology to solve real-world business problems by providing an unalterable record-keeping system.
By creating a data layer on top of the Bitcoin blockchain, Factom’s distributed ledger technology secures millions of real-time records in the blockchain with a single hash using cryptographic isolation. Businesses, governments and any other organization that relies on secure data can use Factom to document their information so that it cannot be modified, deleted or backdated.
Factom’s technology decentralizes record keeping by ensuring that the integrity of stored data remains intact, providing complete transparency, while at the same time maintaining user privacy in an increasingly digital world.
CoinTelegraph spoke with Peter Kirby, the president of Factom, who works closely with leaders in financial services, government and law to address the most complex data security issues around the globe. We discuss the company’s in-process crowdsale, the recently held Texas Bitcoin Conference, and how the blockchain-based data layer can not only solve Bitcoin’s scalability issues but also real world business problems by providing an unalterable record keeping system.
CoinTelegraph: Your factoid crowdsale began on March 31. How has that been going and what how will the funds be allocated?
Peter Kirby: The Factoid Software sale has been really exciting. So far, we have sold over US$200,000 in 48 hours. This becomes the endowment for the Factom Foundation, a non-profit organization that focuses on developing the open-source software. 75% of the funds will go directly into development and the remaining funds will go to administrative, legal, and outreach.
CT: You recently took part in the Texas Bitcoin conference in Austin. How did you find the event this year?
PK: Paul Snow, my partner at Factom, runs the conference along with his wonderful wife Linda and a small army of passionate volunteers. The venue this year was the Moody Theater, home of ACL live - right in the heart of downtown Austin. This year there was an emphasis on giving and contributing to good projects, but there was also an eye-opening regulatory panel with an SEC representative and a Texas specialist on money laundering and cartels. They even had a fireside chat with David Johnston and Erik Voorhees.
Factom was the title sponsor of the conference, so we spent most of the time talking about our project and discussing the software sale with potential purchasers.
CT: Factom recently announced some new partnerships with Rivetz and Vaultoro, for example. How do these partner companies fit into Factom’s strategy moving forward?
PK: We have a goal to move the conversation about blockchain technology beyond financial tools. Factom lets you use blockchains for data and a lot of our partnerships are to explore interesting ways to demonstrate this power. For example, Vaultoro has a very transparent system to let gold holders see exactly what’s going on with their holdings. With Factom, they can build a true third-party audit system to provide an even higher level of transparency and accountability to their customers.
We’re also trying to be a good member of the open-source community and contribute to blockchain technology tools. Our partnerships help us explore a next set of best practices to share with the ecosystem.
“Factom, by design, can handle many orders of magnitude more data than Bitcoin - so it’s built for a different level of scalability, speed, and cost than Bitcoin.”
CT: There is an ongoing debate about bloat issues with the Bitcoin blockchain and increasing the block size limit. How does the Factom data layer on top of the blockchain address this problem?
PK: Blockchain bloat is a big problem and probably one of the key hindrances to adoption by mainstream institutions. I really like Gavin’s proposal to increase block size and believe that will help tremendously.
Factom takes a slightly different stance. We believe that blockchain technology (like the internet) is made up of layers. The Bitcoin blockchain should provide a value transfer layer (kind of like TCP/IP provides a packet transfer layer) and tools like Factom can handle more complicated data structures that helps us move many transactions off the Bitcoin blockchain and in to a data layer. Factom, by design, can handle many orders of magnitude more data than Bitcoin - so it’s built for a different level of scalability, speed, and cost than Bitcoin.
CT: Identity theft and social network hacks are becoming increasingly common. Could Factom potentially make Facebook or Twitter more secure when it comes to managing your online identities?
PK: Yes. Paul set out to build an identity and reputation platform on the blockchain and discovered that it was impossible without a general purpose data layer (like Factom). Once you can build a bullet-proof identity ledger on top of Factom, you can imagine validation and verification of your Facebook credentials or Twitter identity that are vastly more secure than the current systems.
Identity and reputation on the blockchain is a very powerful idea that still requires a lot of heavy lifting, but you’ll start to see some applications come out that explore it soon.
CT: In your view, how big is the disruptive potential of Factom? Who will benefit the most from this solution and who stands to be disrupted?
PK: Paul Snow wrote “Honesty is Subversive” as the introduction of the Factom white paper. The idea that we can build transparent and tamper-proof systems of record is very powerful. Most of the fiscal and political crisis of our lifetime is due to poor record keeping (like the mortgage industry) or a lack of transparency (like the Enron fiasco).
“Most of the fiscal and political crisis of our lifetime is due to poor record keeping or a lack of transparency. […] I believe that real time auditing of government spending will bring a new level of accountability.”
I see lots of big institutions like banks and insurance companies creating transparent systems to better serve their customers. I imagine a tamper-proof voting system will reign in corruption. I believe that real time auditing of government spending will bring a new level of accountability. I’m excited about the world the blockchain hints at.
CT: Interpol cyber threat researchers have recently identified a threat to the blockchain in virtual transactions which could result in their being embedded with malware or other illegal data. Is malware a potential threat to data on the Factom blockchain data layer?
PK: Factom is designed in a way that you can choose what data you want to hold. So if you ran a Factom node, you could easily prune any illegal data or malware that someone tried to enter (just like you can avoid downloading malware from the internet, but can’t prevent it from being posted).
Entering data into Factom also has a cost, so there’s a disincentive to just dump garbage and spam into it. That’s a big improvement on the way the internet works today.
CT: What are your thoughts on other decentralized data storage approaches like Storj, Maidsafe etc.?
PK: I’ve had a chance to meet Shawn and Tome at Storj and a few of the Maidsafe guys like Daniel and Nick. Totally wonderful people working on some impressive technology. It fills a different need in the technology stack as Factom, so we’ve been able to collaborate on projects and share ideas. These are tools that look to replace cloud storage like Dropbox. Factom is designed to be a thin data verification and validation layer.
CT: When and where can we expect to see Factom in action?
PK: You can hop on Github and build on the Alpha version of Factom right now. It’s been live for several months. At the $Million Hackathon this weekend, a pair of programmers built a true Internet of Things application around some security cameras and used Factom as a back-end. Great way to show off the power of blockchain technology.
Beta version of Factom will go live in May following the software sale.