What is White paper and how to read it?

White paper, in fact, refers to a comprehensive report of the performance of a plan or project and the problem it solves. The use of white paper is not limited to the world of Cryptocurrencies; But today, the term is also widely used in the Blockchain and Cryptocurrencies space and is seen frequently. In this article, we take a look at the importance of white paper in the field of Cryptocurrencies and examine the correct ways to study it.

What is white paper in the field of cryptocurrencies?

white paper in the field of cryptocurrencies is a document (usually a PDF file) that provides a comprehensive description of a decentralized project (cryptocurrencies or Blockchain-based network). In fact, a white paper is an introduction to a project that explains to the reader what problem a project is going to solve. White paper can exist in any field and is not limited to the world of cryptocurrencies.

When faced with a new cryptocurrency (especially if the project is in the initial stage of coin offering, or ICO), the first step we need to take to analyze it is to study the white paper.

The purpose of writing this document in cryptocurrencies is to provide a detailed map of the future of these currencies and their plans. A comprehensive description of the product itself and the technology behind it, the problem this product is going to solve, details about its digital token and information about the development team and their roadmap for the project are among the things that can be found in white paper should refer to them.

The most famous white paper in the world of cryptocurrencies is the Bitcoin introduction report. The white paper, entitled “Bitcoin: An Electronic and Peer-to-Peer Payment System,” was published in 2008 by Satoshi Nakamoto, the anonymous creator of Bitcoin, and marked the birth of the world’s first decentralized cryptocurrency. From this link, you can read bitcoin white paper.

Studying white paper projects (before investing in them) is important for three reasons. The first reason is that it allows you to understand and familiarize yourself with the project. The second reason is that by reading the white paper you can discover the problem that this project is trying to solve and check if this project will be able to solve such a problem or not. Finally, reading a white paper gives you the ability to gauge the validity of a project token, and you will be able to make a more open-minded decision about investing (or not investing) in it.

It should not be forgotten that white papers are written by the project team and therefore no negative point can be found directly in a white paper until a thorough review and analysis is done. Obviously, a project development team only praises their project in their reports, but an in-depth look can reveal the project’s unspoken weaknesses.

Here’s how to put one together for use with your white paper. With the help of this document, you will be equipped with a powerful weapon to decide whether to invest in your next digital currency or ICO.

What are the parts of a white paper?

A standard and complete white paper contains the following sections:

Abstract

In the abstract section, you will be given a brief but overview of the project and the upcoming sections. In fact, the task of the abstract is to encourage you to read more and to arouse your curiosity about the details of the project.

Introduction

The introductory section usually covers basic topics such as the nature of Blockchain and cryptocurrencies and their benefits, as well as the market that this cryptocurrency intends to enter.

Problem definition

This section provides users with more details about the target market of the project and more carefully addresses the challenges in this industry (cryptocurrencies industry). These challenges can be technical or related to the type of business management in this area. The current solutions to address these challenges are also outlined in this section, and the development team states its reasons for the inadequacy of these solutions.

Product Description

In this section you can read the description of the introduced product (in the language of the developer or developers) and find out exactly what this platform, product or service does, how it works and how it will be able to solve the mentioned problems.

Technical Details

In this part of the report, you will find the technical details of the project Blockchain. Items such as detailed and technical description of the product development method, its technical specifications and the method of developing and offering its digital Token are among the items that you will encounter in this part of the document.

Token

This section is entirely dedicated to the digital Token of the project. By reading this section, you will find out what these new coins or digital tokens are supposed to do, what the mechanism is for their release, and how their existence will benefit the users of this project and, on a larger scale, the cryptocurrencies community. Had.

Public supply details

If this white paper is written to sell a specific token, its public offering information will also be included. Tips such as when launching and launching different parts of the product, incentive plans, details about eligible (and unqualified) people to invest in the product, how to use the raised capital and the project roadmap are some of the things you will access in this section. Had.

Introducing the development team

The end sections usually contain information about the project founders and senior developers. A strong and experienced team is one of the main pillars of success in any cryptocurrency project. For this reason, having this section in WhitePaper is very important (and we recommend that you read it). In this section you can find the specialized records of each member of the project and get acquainted with the role they play in the current project.

Conclusion

A good white paper ends with a conclusion. In the concluding section, a summary of the main points of the project is mentioned, and if the public offering of the token is about to take place, this issue will be reminded in this section so that interested people do not miss the opportunity to participate.

Do not rely on white paper

Although a white paper study is required before investing in a project, it should not be relied upon alone. As mentioned above, a white paper is published by the development team and therefore it is not possible to get a complete picture of the potential problems and challenges of the project.

Apart from white paper, there are many other criteria that show how positive the future of a project is. You can learn more about these criteria in the Fundamental Analysis Training article.