How to Read and Analyze a White Paper?
Whether you are an experienced crypto pro or just a crypto-curious, the white paper is an effective tool for gaining a deeper crypto understanding of a general or a specific project or coin.
White papers can seem incredibly daunting, but luckily, you don’t have to read every white paper only for the projects that you find interesting or worthwhile. You can’t avoid whitepaper if you are a blockchain space lover as an investor, businessman, or developer. Every week a new blockchain or cryptocurrency whitepaper identifies new technologies that will revolutionize the industry.
Crypto investors need two crucial whitepaper-related skills to make profitable investment decisions. The skills are they should be able to read a white paper and distinguish good white papers from poor ones. Therefore, CoinMarketCap Alexandria presented a comprehensive guide to crypto whitepapers.
The primary reason for reading a whitepaper is to distinguish the wheat from Chaff, which means good from the bad. Learn more about whitepapers, their structure, their popularity, and how they differ from others. So,
What is a Whitepaper?
The term whitepaper comes from politics. The first whitepaper Churchill introduced a policy idea before becoming law in 1922. In the 1990s, Whitepapers became more prevalent in marketing and sales and became a tool to promote products and increase intrigue among prospects.
Crypto whitepapers also work like that, but they have different objects based on the target audiences. For example, Bitcoin-written white paper informs people about a technological breakthrough: sending cash from one to another party without an intermediary. Most people write white papers to market or raise funds for a project.
In short, the more straightforward the white papers’ content, color, and design, the more marketing-oriented it is, and the more academic its tone and style, the more informative and technical it is.
Types Of White Paper
- ICO White Paper
- IEO White Paper
- DeFi White Paper
- Meme Coin White Paper
How to Read A White Paper? A Complete Structure
Modern white papers follow a general pattern, and their backbone structure contains the following sections.
The Reasoning Behind the Project
In this section, a white paper presents a problem the project seeks to solve. On the other hand, it paints a picture of how things are now and sets the stage for its solution as a game changer.
Utility and Use Case
The following section introduces the solution to the problem, where a whitepaper explains how the projects differ from potential competitors. It further illustrates what innovation it introduces, how to use it, and why we require it in the first place. Usually, the whitepaper’s mitty part provides an easy way to modify a good paper from a poor one.
The Blockchain Architecture Behind the Whitepaper
If the product is blockchain, a fine white paper presents the working of blockchain and distinguishes it from its competitors. Besides, the blockchain architecture outlines the consensus process and the chain’s competitive advantage. If it is a decentralized application, the white paper explains what chain it executes and why the team chooses this distinct chain.
Token Distribution & Utility
It is the whitepaper’s essential part that spots the bad apples. An adequate white paper explains the allocation, vesting of tokens, and prices that private sales conduct. A poor whitepaper, on the other hand, skips all that information. The white papers also explain the utility of tokens and understand that investors want to know the token distribution.
The Roadmap
All white papers have different forms of roadmaps, and going into detail increases the project’s utility. Poor whitepapers list points, such as marketing campaigns, exchange listings, and website updates, and provide poor performance. Although the roadmaps can move the project forward, they also distrust how long-term oriented the team is.
Team
The white paper should contain some information about the team members behind the project, whether they are anonymous or not. The unidentified developers can build trust by providing information, including who created a token.
The Way to Read A Whitepaper
It would be best to consider some things when reading a white paper. Blockchain-illiterate people can read modern white papers, but crypto companies believe that investors don’t know how blockchains work. Further, they worry about potential returns, and if a project has an interesting use case, white papers care about that. So, all you need is basic knowledge of how cryptocurrency works. Before starting, you should know what Ethereum and Bitcoin are.
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