FACTOM INTRO: https://youtu.be/6NF7ZqaQHqsThis is why Factoids will have tons of value in the years to come...when the protocol has the target 32 federated servers, there will be major incentives to run a Factom server. Once the protocol is being run on the 32 federated servers (along with an additional 32 audit servers), then about 73,000 factoids will be created per year and paid to those servers. Forever.
On the other side, users that want to use the protocol must have a public/private key pair that control Entry Credits. Assuming you have such a key set, you can sign messages to create chains and entries as long as those keys (what we call an Entry Credit Address) have the balance to pay for those transactions.
So how do you "charge" an Entry Credit Address? By converting factoids into Entry Credits. This removes Factoids from the supply. Entry Credits are not transferable, and do not pay federated servers. In some sense they are pre paid rights to use the protocol.
The Federated Servers set the exchange rate of Factoids to Entry Credits. They do so to maintain a constant real world cost for Entry Credits, around 1/10 of a cent today. Someone that wants to use the Factom protocol never has to touch a tradable token. They can provide an Entry Credit address to a third party that converts Factoids to Entry Credits to charge their Entry Credit Address.
Also, the only way the Federated Servers can increase their compensation is to boost the value of their token. The only way they can do that is increase demand for the token. And the easiest way to do that is to promote the use of the protocol, which reduces the token supply.
The Factoid token was never intended to be used in commerce. The idea is to create incentives for the Federated Servers, and to do so from within the protocol. Using Bitcoin would require someone to hold an account and make payments to the servers. And while a structure of bonds and multisignature addresses might be able to do this, it would also increase the load on the Bitcoin blockchain transactions as the protocol grew. From the beginning Factom wanted only a fixed load on the Bitcoin blockchain. Under the current design, that is less than 13 MB per year.
Right now FCT has 0% inflation. This coin will be a powerhouse soon... It will get the attention it deserves when the time is right.
Milestone 2 is currently in the works. Milestone 2 will have a couple of major components. First will be the deployment of a Entry Credit store, where users can buy Entry Credits (basically access to the protocol) without touching any sort of tradable token. FACTOM EC Store will be brilliant to drive mainstream adoption. Institutions will not have to deal with crypto to start using FACTOM. This will accelerate adoption IMO. The entry credit store will be BURNING FACTOIDS in the background and the end user will have no idea. They will just be buying their entry credits. Factom is 0% inflationary until M3. So once M2 comes out it should theoretically drive the demand of FACTOIDS up because more Entry Credits will be used.... The second will be the release of the consensus algorithm during M2, the software supporting distributed processing of the Factom protocol. The price should start to reflect this on the way up to M3. The price will reflect how much the NETWORK is being USED. The major difference between Ethereum and Factom is that Factom records data only. Ethereum is for general compute. But the advantage of data is that the user knows the data length ahead of time. Computation needs are not obvious. So gas needs to implement refunds, entry credits do not. So the conversion of tradable factoids to entry credits can be isolated and independent of the use of entry credits.
"The token exists to provide incentives to run the servers for the protocol. They get a fixed number of tokens forever, but tokens are effectively burned by use of Factom. So the incentive is to promote the use of the protocol. All applications running on Factom support the value of the token. There is no mechanism to "siphon off as much money" from the protocol. We plan to run a server, so the token price has importance to us. The way to support the value of the token though is not through pumping the token. It is through building applications that use Factom. Factom uses anchors (hashes embedded into blockchains) to allow cryptographic proofs of data in Factom from those blockchains. Furthermore, the administrative overhead (factoids, entry credit accounting) is segregated from the data in Factom. So those data proofs strip off all that;the proofs are just your data. We will be supporting Ethereum, Bitcoin, and other chains. This allows a Bitcoin based application to access proofs to the same data as an Ethereum application. Ethereum can certainly notarize data, but it is optimized for compute, and doesn't interface with other chains. One can write smart contracts on Factom, but factom is optimized for data; Factom has no native scripting language." -
Paul Snow “Factoids are demanded and removed from circulation when users buy Entry Credits (EC) to use Factom. The Factoid/EC exchange rate is set by the Federated servers. The goal is to have a stable price for EC. This will allow Factom users to ignore the Factoid price if it goes up or down, just like how Gmail users can ignore the Google share price”. –
Brian Deery, Factom Chief Scientist.Value is function, it's subjective, individual and dependent on situationsIf we think about value, it's about psychology. And if one keeps on questioning, there is most likely no objectivity to find. The reason is, that it first needs a basic lack of something that needs to be solved - out of an individual perspective. If there is a basic lack we try to find solutions and we already see this solutions as value. One functional solution is build on another which can give the impression of objectivity. But that is in fact an illusion. We see money as value? It has function. It can have psychological value, ppl feel more safe with money than without it, but just because it's a potential solution to solve a lack of "something".
What's the highest value humans can think of?
Most people see the own life as the highest value they can think of, but some people "sell it" to rescue the life of somebody they love if needed (basic lack). Some people even choose death as "function" to solve a lack - if there is deep suffering. Some people even give their life for an idealistic concept. But even the most talented manipulator can't brainwash anybody into a fanatic concept if there is no suffering (basic lack).
It becomes interesting when we think about the connection between "what do I see as value" and "what do others see as value".
Again one extreme example: Like already said, most people see most or at least high value in their own life. But: Suicide reason Nr. 1 is always psychological isolation (losing hope and perspective in a fundamental way is isolation). Depression as reason for suicide? It's an expression, not the real lack. Alcohol and Drugs as reason for suicide? Alcohol and Drugs had just function and lost that function, or are not available (what makes the basic suffering even more intense.). And than death can become to a "function" to solve suffering while the one and only solution in life would be to solve psychological isolation.
It may sound nearly religious or even esoteric, but that (the feeling of isolation) is the basic lack all humans want to solve and everything they believe to see value in, is first something like a very natural and deep instinct - like relations to others. That's one reason btw. why isolation is a very hard form of torture and every possible way of torturing involves at least aspects of isolation (losing hope and perspective is always an aspect).
Why I'm a little bit philosophical here is, because all values we know of are in fact concepts about functions to solve a basic lack. We build one potential solution on to another and that always has two sides: It can help to reduce the basic lack but it also creates new ones --> we need more functional solutions. And that is the basic reason for all technique we know of since the beginning of human history.
And the very important point if we think about value, is the topic "others" to solve "psychological isolation". Because what do we basically see as solutions? Psychologically it's about all forms of communication which is the requirement for all kinds of relationships. Technically we often call it connections but in fact communication and connection are synonym. And there is no functional solution for any problem without communicative/connective aspects. There isn't even a way for a solution without that.
That is also important because one individual not just sees value in something (a possible solution). Because the basic value already is about communication/connecting to others to solve a fundamental lack, we also need communication and reassurance if we are not alone with our view on potential value. That's a very interesting point and we can see that everywhere. No objectivity. The technical best solution has no chance to be seen as highest value if just one person knows about it but everybody else prefers something that is inferior. More precise: Just the fact that others see more value in something that is inferior makes it superior regarding value.
The basic principle is always:
1. There is a lack, a problem that needs to be solved.
2. There is a concept about a function as solution
3. If we have trust in that concept we try it
4. If it keeps promise we have a working function
5. We see value in a working function
6. That value increases if it's time-constant
7. That value increases the more other people believe in it
And also the points 2 and 3 already involve(d) "others" (knowledge is always a result of communication). We need communication to find a concept. We need communication to reassure us if others show at least trust, or even better, if they already can show "proof of concept" because they already tried it.
GoldEven the value of gold is based on that principle. It's seen as a basic store of value. It can have technical function but that is not the reason for the value that is seen in gold. It's the potential to have "value-function" that gives value and that is a result that others see value in it. It becomes obvious if we subtract that aspect. Would gold have the value it has if others wouldn't see it as store of value? No. Would we see gold as store of value if it wouldn't have been seen that way since millennia? Most likely not. And it's value is always just a potential. I need to sell it to have money to sell that money to buy a solution for an existing problem.
Dollar or Euro? It has function and it only has function because there is an agreement to see function in it. People call it value but that value also lays in it's potential to solve lacks/problems.
BitcoinAnd it's very interesting to think about Bitcoin with that in mind. Why do we see value in Bitcoin? We need to know where are the problems it solves or at least could solve to answer that question. Bitcoin is seen as value because of the weaknesses of existing solutions. The financial system is slow and it's expensive, it's centralized and corrupt, it's economically flawed by design (which lead to so called "solutions" that makes it even more expensive, more centralized and more corrupt). With other words: There are again a lot of problems to solve. And Bitcoin is seen as a solution: decentralized, international, fast, secure (...). It's a very interesting mix of idealism and technology.
But is the Bitcoin-price where it is because people really use it as solution for existing problems? No. Even the majority of Bitcoiners use existing methods. Most people who buy Bitcoin want to make profit. That is the function the majority sees in it for now. Bitcoin-Investors bet on the possibility, that already existing problems of the established financial systems become more pressuring (high inflation for example or even a fundamental crash) which would lead more people into Bitcoin as a solution for those problems. And that's a bet that could turn out as very profitable. But the value for now is also totally based on the question "do other people see value in it, and will more people see function and therefore value in Bitcoin in the future?".
And... Also Bitcoin as a potential functional solution has problems and needs solutions. There is the question how to keep it decentralized. A centralized Bitcoin would include all problems the established systems already have, but it would die even faster. And there is the blocksize-problem that limits it's potential and is a threat for the Bitcoin-economy, etc. The high volatility is also seen as something that limits it's potential and for some it's a reason not to trust in Bitcoin as store of value, while others see a (potentially) profitable function especially in that aspect.
FactomAnd Factom and Factoids are even more interesting if we focus on it's value more basically. The basic principles of value I tried to describe above are way better reflected in Factoms functionality and design than in Bitcoins functionality and design.
The problems that Factom promises to solve, with it's focus on data, are more pressuring for more people in the present, than the problems of the financial systems. That could change any time (financial crisis could become very intense at any time), but for now I believe it's true. And a lot problems of the financial systems also are connected to data.
With other words: If Factom or a system like Factom would already be finished and working since 3 years (for example), it's likely that it already would be used more than Bitcoin is used. And because a system like Factom doesn't record and store just the past of "cold" transactions, but data, it also involves a more intense incentive to continue with that. Data is more meaningful. The past of all kinds of data involves deeper identifications, even if it's more about business-data. That principle becomes even more intense if data is connected to other data. Potential barriers to use Factom are lower than in Bitcoin. The "establishment" still sees Bitcoin as kind of shady and if Bitcoin should become mainstream it would be seen as a real threat. And it's very common to attack everything in many ways that is seen as threat for existing interests. There may be scenarios that Factom also could be seen as threat for existing interests, but it's true what Paul Snow often says: Honesty is subversive. Factom's low barriers make it possible to be much more subversive than Bitcoin is. That makes it more possible for Factom to find it's way into already established system to change them to the better, while Bitcoin is like an offensive attack against an established system.
And it's economical design is also a better reflection of potential value than Bitcoin. The conversion from Factoids to Entry Credits gives additional trust. Plus: Maybe Factom is a better mix of control and decentralization at the same time, which could turn out as more time-stable.
The point is: If we think about the value of Factoids and if it's possible that FCT's become a store of value or would be used even as payment beyond the system itself, there are some reasons why the answer could be yes. The basic reason to see value in something is trust in time-stability - that "others" believe and continue to believe in it's value as well. And a recorded past of data gives a more of trust because it gives high incentive to continue with that. There is also more potential for a network effect or with other words: Factom is, (because it's about data) more "communicative". It connects in potentially many ways and therefore "deeper" than Bitcoin. It's all subjective of course, but it won't be machines who will make a decision to use or not to use Factom or if they continue using it or quit.
Btw: That principes are a little bit similar to Facebook. I know some people who say that they wouldn't make an account and use FB if they wouldn't already have one. They already "recorded" a past and that gives some incentive to update it. They are already connected to others and that also is a high incentive not to leave or to switch to another system. It's possible that there are social networks that are better in some or even many ways than Facebook, but nobody will use an alternative if others stay in Facebook. The identification with Factom is more intense because of the past and because of the connections. That is the basic value of Facebook for it's users.
And Factom's (and therefore Factoids) basic value will be - if successful:
1) ...there are a lot of existing and very pressuring problems for many people without an easy solution yet
2) ...Factom (hopefully) will be seen as a functional solution to solve those problems
3) ...if "some" use Factom "others" will see that as proof for that functionality
4) ...if "some" use Factom it can be an incentive to use it as well to connect with others
5) ...a already recorded past is a high incentive to continue with that instead of shifting to another system.
6) ...if there should be even connections of data between X and Y and Z, it will be an additional and intense incentive to continue instead to shift
With a focus on basic principles of value, it can be superior to a system like Bitcoin in my opinion, because it's a better reflection of all of those aspects and therefore more effective. The same can be true for a system like Ethereum. But even if "smart contracts" seem to sound more "special" for many than Factom's use case, that concept could turn out as wrong. In my opinion it's superficial. Factom's use case will most likely turn out as superior to smart contracts, because it's more basic and the problems to solve are more pressuring. And because of the complexity, it will be much harder to establish a smart-contract-system on a blockchain than a data-recording-system on a blockchain. And while I believe it's not just possible what the Factom team wants to realize but also possible that it will be really useful and find it's way into the "business-world", I don't believe that Ethereum has much chance to become the system that really realizes smart contracts to become established. That is about Point 2... It will be most likely way easier to see a time-stable solution in Factom than in Ethereum.
Long story short: In my opinion and with a focus on basic value-principles, Factom is pretty perfect because it's the best combination of
1) "high incentive" to use it because of already existing and high pressuring problems without much alternative yet
2) hopefully high functionality to solve existing problems
3) low barriers to use it
4) high potential for a network effect,
5) a lot of potential for a first-mover advantage
6) and if established at one point: high incentive not to switch to another system. REAL WORLD USE CASES:1. : dhs.gov/science-and-technology/news/2016/06/17/st-awards-199k-austin-based-factom-inc-iot-systems-security
(BUILDING AN ID SYSTEM FOR THE US GOV)2. Factom Use Case: Protecting Sony Pictures with Blockchain Technology: https://youtu.be/M8dey4Uo5eY3. Factom Use Case: Saving BoA $17 Billion: https://youtu.be/2Dj3qZeSLdY4. Factom Use Case: Unlocking $9 Trillion in Land Value: https://youtu.be/DxgoyMOrMBMBITCOIN SCALING ISSUE:gavinandresen.ninja/it-must-be-done-but-is-not-a-panacea
(Factom mentioned)INTERESTING VIDEO LINKS: FGS2016 Panel: Blockchain's Coming of Age hosted by WEF with IBM, R3 and Factom: https://youtu.be/LwoDzB1kHSUArchives and Society: Record Keeping in Historical and Contemporary Perspective: https://youtu.be/H1mhiPrwrMgFuture Of Data: https://youtu.be/WFDvi7xW08EThe future of data, technology and the Internet: Futurist Speaker Gerd Leonhard #Online12 : https://youtu.be/i7qTCoNVj3sThe Secret Life of Big Data | Intel: https://youtu.be/CNoi-XqwJnAWhat is Big Data? Big Data Explained (Hadoop & MapReduce): https://youtu.be/c4BwefH5Ve8Cool video from IBM on DATA: https://youtu.be/aWShHDhF8YoDeep Learning: Intelligence from Big Data: https://youtu.be/czLI3oLDe8M The Future of Big Data: IT Insider with MIT Prof. Sam Madden: https://youtu.be/367KWPASWtEThe Future of Data Science - Data Science @ Stanford : https://youtu.be/hxXIJnjC_HILockheed Martin Speaking of the Future: Data Analytics : https://youtu.be/t02BBmuiOOUThe Future of Big Data: Bigger and Smarter: https://youtu.be/-CABR38CbPMFactom - Big Data on the Bitcoin Blockchain: https://youtu.be/oNv45gw44WgBnk To The Future 2015 & forecasting the future of finance for 2016 & beyond: https://youtu.be/WmXKuSl3h8w ( Factom mentioned at 7:20)More Links:http://healthitanalytics.com/news/is-blockchain-the-answer-to-healthcares-big-data-problemshttp://www.wired.com/insights/2014/08/sciences-big-data-problem/https://www.factom.com/apollo/https://www.factom.com/isoftstone-and-factom-announce-a-partnership-to-integrate-blockchain-technology-and-smart-city-solutions/https://letstalkbitcoin.com/blog/post/real-big-data-ht-leverage-bitcoin-blockchains-for-unlimited-storagehttps://www.youtube.com/watch?v=saZlYvBw1xg -
Great interview with Paul Snowhttps://www-03.ibm.com/press/us/en/pressrelease/49632.wss (Factom mentioned)http://www.ibtimes.co.uk/factom-signs-smart-city-deal-roll-out-blockchain-verification-across-china-1542059
