Two Bitcoin Transactions: 29,000 Books

How two bitcoin transactions notarized the entire Gutenberg library

How Bitcoin Could Make Your Notary Obsolete

 The bitcoin blockchain was originally designed just to send money, but now people want to do lots of other things with it, from recording messages in it, through to sending different kinds of property across the bitcoin network.

The problem is that these people have to write messages to the blockchain, which is a large file shared by everyone on the bitcoin network that records all bitcoin transactions.

That makes the blockchain bigger and more cumbersome.

So some companies are now independently trying to do more things with the blockchain while minimizing the burden on it.


One of these companies is called Factom. It is focusing on one particular kind of non-financial transaction for the bitcoin network: notarization. In the paper-based world, notaries record documents such as wills and other legal contracts, and guarantee that they haven’t been tampered with. Factom wants to use the blockchain to do the same thing.

Creating reliable records is a big part of any business process, argued Peter Kirby, president of the firm. “At the core of every business problem is a system of record problem,” he said.  “A business is basically just a big stack of records.”

Bitcoin’s blockchain is really good at proving that things haven’t been tampered with. Lots of computers all work to solve a difficult mathematical problem when writing a transaction to the blockchain.

This mathematical problem acts as a kind of electronic seal. Anyone wanting to tamper with the contents of a transaction would need to redo that mathematical problem – and all the math puzzles for any transactions written after it – to stop people noticing.

This is why Factom wanted to use the bitcoin blockchain for notarizing documents and making them tamper-proof.

But it didn’t want to clog the blockchain full of messages relating to notarized documents. After all, the bitcoin blockchain was really meant to record financial transactions, not to make other documents tamper-proof.

To solve the problem, the company created its own system linked to the bitcoin blockchain that could be used to notarize lots of documents using only a small number of bitcoin transactions.

Factom still inserts transactions in the bitcoin blockchain, but it only inserts one every ten minutes. That transaction has to represent lots of other notarized documents. It’s the tip of a digital iceberg of records.

A Digital Iceberg

Factom stores all its other records outside the bitcoin blockchain, in a distributed set of files controlled by many different computers, all owned by different people.

The transaction that Factom stores in the bitcoin blockchain is a hash of all these different records. These records in turn are hashes of yet more entries, which are hashed versions of individual files. In this way it’s able to verify thousands of records in a single bitcoin transaction.

The idea is to notarize thousands of files with very little impact on the bitcoin blockchain.

“One of the demonstrations that we did was to take the Gutenberg library, and hashed 29,000 entries,” said Paul Snow, co-founder of the firm.

“Two entries into bitcoin secured 29,000 transactions in Factom, reflecting about 6Mb of data, that secured about 8Gb of books.”

The books themselves were not stored in Factom, but the hashes prove the integrity of the books at a certain point in time. If someone changed a word in one of the books, then it would alter the hashes all the way up the hierarchy, including the hash stored as a bitcoin transaction. The hash stored in the bitcoin transaction is itself protected by the entire bitcoin network.

This means that anyone can check a document against the document notarized in Factom’s system to see if it has been tampered with since.

“While securing books isn’t necessary that interesting, they could just as easily have been legal documents,” said Snow. Or land registry entries, musical works, or invoices.

Factom recently had a crowdsale to raise money so that it could bring its product to market. It hopes to start providing notarization services for different businesses.