Factom is a second layer protocol that extends and complements the capabilities of Bitcoin. There is a FCT coin in the Factom network. A maximum of 8.7 million FCT coins can exist. Factom offers various blockchain-based tools:

• Apollo is designed to reduce the risks of centralized databases;
• Iris is a software tool for security;
• Hera is designed to improve system scalability;
• Harmony is a set of tools for working with mortgages;
• Acolyte allows you to create oracles for smart contracts.

The Factom network has such types of cryptocurrency nodes as federated servers and audit servers. Federated and audit Factom nodes are designed to protect the integrity of data in a blockchain. These crypto nodes work together using a multi-leader mechanism based on the Raft Algorithm. In practice, this means that the majority of cryptocurrency nodes must be collected to make entries into the blockchain. There are 33 Federated servers and 32 Audit servers in total. Federated servers have the right to make entries into the blockchain. Authority Factom nodes monitor how federated servers perform their tasks. If one of the federated servers has problem processing transactions, one of Factom nodes' authorities can replace it. This ensures network integrity if the federated server is failed or is compromised. Factom nodes are rewarded in FCT coins for transaction confirmation. Federated and audited Factom nodes are selected by voting among network members.

There is also a follower Factom node in the system. They are designed to connect via API to Factom blockchain. Technically, this public node is a VPS or dedicated server with at least 3 GB RAM and 50 GB SSD. It requires a 64bit Linux operating system (Ubuntu/Debian) and installed software for public nodes. Data transfer via secure HTTPS protocol is supported. Developers of dapps and smart contracts can run their follower Factom node to communicate via the API with blockchain.

Data storage in the system is paid using internal Entry Credits (EC) tokens. New EC tokens appear in the system in exchange for the destruction of FCT tokens. EC tokens in the network Factom have a fixed price, it is $0.001 per kB entry. This way, enterprises, and organizations can pay for Factom without cryptocurrency. To reduce the amount of storage space required, a cryptographic structure called the Merkle tree is used. All hash is sequentially reduced to a single hash, called Merkle root. From this point, as from the root of the tree, new Merkle trees can grow. Thus, the Factom blockchain can be used in IoT and other areas where it is important to reduce the amount of transmitted information. Each device has its chain, which simplifies device monitoring and data processing.

The Factom project was the first practical realization of sidechains. Any company or organization can create its sidechain and link it to the main Factom blockchain. Within the sidechain, there is a hash of different files and documents. This way their authenticity is confirmed. The total hash for the Factom blockchain is saved in the Bitcoin blockchain every 10 minutes. Further development of the Factom software is based on accelerating sidechains and making them easier to work with.