Whitepaper - Factom With Cover

After purchase, the Entry Credit Chain(s) will allocate the Entry Credits to the appropriate public
key. That Entry will look like:
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Public Key
Number of Entry Credits purchased
Using Factom without Factoids
Many users of Factom may not want a wallet, and will not want to hold any cryptocurrency
asset. But they will want to create their Chains (ledgers) and add their Entries. Factom’s two
step recording process allows for the separation of Factoids, Factom’s tradeable token, from the
right to post Entries to Factom, represented by Entry Credits. Servers and other recipients of
Factom Tokens can sell Entry Credits to customers for payment via Bitcoin, conventional credit
card payments, etc. The user would provide a public key to hold the Entry Credits. The seller
would convert the appropriate amount of Factoids to Entry Credits and assign those rights to the
user’s public key. Users could thus buy Entries Credits for Factom without ever owning the
Factoids that drive the Factom servers.
From a regulation point of view, this is powerful. The servers earn Factoids from the protocol.
The only parties to that transaction are the server and the protocol. Then the server sells Entry
Credits to users, who eventually return Factoids to the rest of the system. Entry Credits are non
transferable, so the user cannot assign them to another user’s public key, and selling private
keys isn’t practical or useful. In neither transaction is a tradable token (the Factoid) transferred
between two parties.
First Entries on Entry Chains: Support for Homesteading
Factom preserves the first Entry of every Chain to the user who first claims it with a payment. A
convention can be adopted where the first Entry documents the auditing rules for the chain,
including a URL to documentation, or the rules in Text, or a hash of an audit program for the
chain. This convention can be understood as homesteading.
Through a set of revealed secrets, Factom can ensure that the user who creates the Chain
determines the contents of the first Entry. (See Appendix 2 for the Man in the Middle Attack)
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