Factom is a project that aims to build on top of the bitcoin blockchain to provide a ‘permanent, time-stamped record of your data in the blockchain’. This means that a user can store a permanent record of a document on the blockchain by using Factom, which will charge you a small fee. This can be used for many purposes, such as reducing the costs and complexities of conducting audits, managing records, complying with government regulations, and storing a copy of a written contract. Their crowdsale consists of selling Factoids (the Factom currency), which will be converted into ‘entry credits’ that allow users to use their service.
There also have been other similar Bitcoin 2.0 projects, which all aim to build a new service on top of the bitcoin blockchain. Other examples include storj.io, which aims to provide a decentralized cloud storage, and Ethereum, a service that aims to allow smart contracts, which can be used to build currencies, financial derivatives, voting systems, decentralized organizations, data feeds, title registries and thousands of other applications.
Both of these examples started by launching a CrowdSale, however, Ethereum’s CrowdSale came under heavy criticism, because at first, it had only planned to sell a maximum of 5000 BTC that they raised. However, they sold approximately 30,000 of its BTC, which caused a fierce debate, discussing if future crowdsales from Bitcoin 2.0 companies should be trusted. Months later after Ethereum, Factom seems to be doing the same thing.
The Factom Foundation stated the reasons to sell their reserve of bitcoins:
The Factom Foundation is collecting revenue via a software sale to support and further the development of the Factom Software. While we have an asset allocation model built that I will describe here, it is important to realize that this is an investment plan, and during the software sale we will be liquidating portions of the incoming bitcoin that may leave us holding allocations that don’t match what our ultimate allocation model dictates we hold, post software sale.
They have also stated that if their total raised assets from the crowdsale (which has not ended yet) is less than $4 million US dollars, they will sell all of their bitcoins. If they raise more than this amount, they will follow the following allocation plan:
The raised funds will be used towards the Factom Foundation development team, whose job is to build applications and services for the Factom project, and towards Factom Servers, the servers that will host and run the software for the Factom project.