Factom Harmony ($FCT): Establishing Trust and Decentralizing History with Blockchain Technology

The key element of every well-ordered society is trust.  This attribute under-girds economic transactions, engineering accomplishments, and all political affiliations.  When societies degrade, it is a lack of trust that is usually the problem.  But trust is more than just how to live in the present.  Every action has a direction.  It was inspired from something in the past and heads on into the future.  Trust and history go hand in hand.  In order to function effectively in society, one must have access to a trustworthy history as well.  Blockchain technology is changing not only how we trust each other in the present, but also gives us a valuable tool to validate and trust history.

History, centralizing the winners

It has often been said that the winners write the history books.  This statement is usually uttered with a wry sarcasm.  The implication is that the winners, the ones with the centralized power, are skewing history to favor themselves.  The losers, with no power, do not have the ability to push their own perspective to prominence.  What is often left out of this discussion is the important connection between trust and power that exists in centralized societies. On an unconscious level, trust and power go hand in hand.  A civilization can trust a large central power because the power can enforce its will.    Power can create order, if used judiciously, and thereby the ones with the most power wind up being trusted and write the law codes and histories of any given civilization.

Trusting, for better or worse

The reason this system works is that trust often takes practical precedence over truth.  However, power-based centralized systems are doomed to eventual failure because the system is based on a particular individual, or group of individuals, version of truth.  While this version may or may not be close to actual reality, the essential problem is that no one vision is big enough for all of society.   When trust is based on power, it can function for a while but eventually the world dwarfs the central power and the pendulum arc between tyranny and anarchy sets in again.

Blockchain, powerless yet trustworthy

With the advent of blockchain technology, the link between trust and power has been challenged for perhaps the first time in history.  A blockchain is a decentralized ledger that is stored and verified by all of its users.  These users can be anyone with the ability to run the software and access to the internet.  Information that is secured in the blockchain can be audited by anyone but cannot be changed or deleted.  A blockchain rejects any attempts to corrupt it, and because it is stored and verified on all of the users’ computers, it has no central point of failure.  Blockchain technology is unique in history because it can be completely trusted even though it has no power.

Decentralizing history

Since an open-source blockchain depends not on physical power, but on math-based cryptography and decentralized computing, it is not subject to the same barriers to entry as centralized systems.  Access to an open source blockchain is completely universal.  Anyone with the knowledge and the software can read it or write to it.  Since a blockchain is impersonal and not based on power, it is the closest thing to a pure fact that the world has seen to date.  Not only can we trust it in the present, but the cryptographic system that links the blocks together in the chain provides a historical element as well.  As each block is verified, it links to the block previous to it.  This provides an immutable historic record that reaches back to the very first block in the chain.

Hashing out more than just currency

The first blockchain, Bitcoin (Crypto: BTC), was intended for use as a currency.  The technology however, allows for some very unique benefits.  There are ways to use a small currency transaction to encrypt small bits of data into the blockchain.   The mining algorithm that bitcoin uses is called SHA-256.  This is a mathematical process that, when a piece of data is run through it, no matter what size, it produces a random string of letters and numbers that is always the same length.  This string is called a hash.  It is like a digital fingerprint of the original data.  There is no way to get the original data from the hash, but any given piece of data will always produce exactly and only that same hash.  This hash can then be stored in the blockchain as a “fingerprint” of an important piece of data.  If anyone questioned the veracity of the data, they could run it through the hashing algorithm and compare the two hashes.  If they match, then consistency, authority, and date, could be both proven and trusted.

Virtual trust in a practical world

Blockchain-based trust is very different from power-based trust.  Unlike trusting a power-based organization that enforces its will, blockchains are a little like the old joke about the wristwatch.  It does not tell you the time, you have to look at it.  Power-based systems are proof because they are enforcement, whereas blockchains are simply proof with no enforcement at all.  This is useful because it makes them very inexpensive to operate and completely transparent.  This type of proof can be very useful in today’s business world that depends on accurate and trustworthy data.  Verifying ownership and dates of medical records would be one instance.   Another application would be in the area of land titles.  Since each entry into the blockchain cannot be altered, if land transfer data were stored in this way, there would be an immutable public record of land ownership.  Corruption on the part of government officials would no longer be an issue because any land owner could conduct their own transaction and record it within the blockchain.

Factom Harmony: Trusting with the bitcoin blockchain

One of the more innovative of the projects that interacts with the bitcoin blockchain is Factom Harmony (Crypto: FCT).  This project has built its own blockchain with its own native currency.  Factom Harmony has its own multi-tiered consensus structure that validates data within its own blockchain and then for added security anchors it into the bitcoin blockchain.  Factom Harmony’s business model allows a business to retain the details of particular data on their own servers, but anchors the hash of that data on the blockchain.  This allows private data to be publicly verified by comparing hashes, while the details of the data still remain private.  This will greatly increase the value of data.  If a piece of data can be publicly verified and instantly audited by anyone with the details of it still remaining private, it can be used and leveraged by many more people.  The same data is now much more useful because it can be easily and publicly proven to be true.  Not only will this greatly decrease the opportunities for fraud and corruption, it will also streamline many different transaction processes.

Making trust economical

The currency that fuels this validation system is factoids ($FCT).  Factoids can be held and transferred like any other currency, but when a business wants to secure data, they use those factoids to generate entry credits.  Entry credits then pay the Factom Harmony network to secure documents into the bitcoin blockchain.  After entry credits are used, they are burned, thereby reducing the supply.

Peaceful coordination

When everyone can agree on the truth, there is a common starting point for society to operate.  Blockchain technology can help society in ways much more varied than simple currency transactions.  By providing a public and immutable frame of reference, they can validate and provide trust to many different types of personal and business interchanges.  When there is a common frame of reference, centralized force is no longer needed as the underpinnings of society.  By helping businesses and individuals find trust and establish history, Factom Harmony is providing both a valuable service and also contributing to trust and efficiency in the business world today.

To learn more about Factom, visit https://www.factom.com

Contributed by: Josh Justice  

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