Factom is a blockchain for decentralized publication that can exist atop existing blockchains like Bitcoin and Ethereum. Factom enables secure storage of digital proofs for data provenance and integrity solutions without disclosing private data or requiring trusted intermediaries. It is an open-source data layer protocol built on top of Bitcoin. It also allows businesses and individuals to build applications on top of Bitcoin’s blockchain.
Factom uses a distributed ledger architecture that allows related entries to be linked chronologically in a chain for more efficient storage and retrieval. Entries can contain any kind of data, but are not intended for storing private data. Entry data is hashed before being written into an entry block, and the actual entry data is stored in distributed hash tables and shared peer-to-peer.
Each directory block is secured in the Factom blockchain is then further secured by cryptographic anchor entries written into Bitcoin. Anchoring into other public blockchains allows for interoperability and third-party security.
The differentiating factor in Factom is the application of layers over the Bitcoin transaction. The highest layer applied is known as the Directory Layer. It has been developed to organize the Merkle Root of the Entry Blocks.
The reference to the entries of data is managed by the Entry Block Layer. It organizes the references to the Entries made. Entries are the raw data that is accepted by the protocol. It can be a private hash or a group of data provided by the user.
Factom employs hash technology, a cryptographic function that converts the digital data into alphanumeric strings. These strings are in the form of digital fingerprints. Factom ensures the security of these hashes in three ways:
Proof of Existence: The protocol anchors a hash to the Bitcoin blockchain every 10 minutes. This is the proof of existence method that records the location of all the data added.
Proof of Process: The manner and the process of the entry are also recorded. This eliminates the problem of double spending.
Proof of Audit: By anchoring the data to the blockchain network, Factom makes the data available for audit at any time. The Bitcoin network only stores financial data. Factom on the other hand, can store all the kinds of data.