What is a Whitepaper?

A whitepaper describes what a project / ICO is about, what problem needs to be solved, what the short and long term goals are, and how they plan to achieve these goals. Even Bitcoin and Ethereum once started with a whitepaper. In fact, the whitepaper phenomenon has been commonplace in the technology and business worlds for many decades. Therefore, the whitepaper is the document you should read carefully before investing in a new project.

Rule of thumb: if something is too good to be true, then…

If something is too good to be true, it almost always is. Anyone who frequently peruses white papers is familiar with the rambling texts that are often included in them. If you don’t know better, it seems like every ICO has the solution to all the world’s problems. Of course there are many ground-breaking crypto projects, but unfortunately there are also many meaningless projects and even scams. Try to pierce through slick marketing texts and focus on the basics, namely what does the project stand for and how do they intend to achieve this (substantiated).

When reviewing a whitepaper, try to answer the following questions:

What does the project do?

The main question on which everything revolves is of course what exactly a project does. After all, you want to know what exactly you are going to invest in. While reading a white paper you can’t quite work it out or you find it all only vaguely described? This could mean that the project is far too advanced and you need more knowledge, but it could also be that the project is simply not capable of doing anything. As the great Omaha’s Oracle, Warren Buffet, says: Never invest in what you don’t understand 100%!

How will the project do this?

Having a great goal is one, but an explanation of how to achieve it is two. This so-called roadmap should not only be clear and straightforward, but above all realistic. Everything you read should be described to-the-point. The more words that are needed to describe the method, the more you are beating around the bush. Well described is well thought out. An example of a good white paper is Bitcoin’s own.

Is this project really necessary?

Ask yourself if there is actually a market for the project. An ICO may claim to provide the solution to counting the number of blades of grass on a soccer field, but to what extent is it necessary? A project can also simply be pointless. In a good white paper, they themselves already answer the question of whether the project is actually necessary. Also carefully check yourself how much competition there is. Maybe there are five similar projects and a new ICO is completely unnecessary.

Is there an abuse of the blockchain hype?

This point deserves some additional explanation. What we mean by this is to check to what extent is there a ground-breaking blockchain project? After all, the term blockchain is currently and hype that is also quite abused. Some ICOs do not need a blockchain at all, they could also suffice as an app on the phone or as a simple software program on the computer. Is blockchain on the home and garden scale really necessary? The term blockchain is often misused in order to gain easier access to new investors.

Hopefully you are now better prepared to start reading whitepapers with a clearer mind and focus. If you want to read our whitepaper, please follow this link!

In any case, if you are new to the crypto world you should want to learn other terms and concepts that are typically used in the crypto world. Please visit these blog posts here: 51 crypto terms you must know! and The 9 most important concepts every cryptocurrency beginner should know.

Published On: July 15, 2021Categories: Blockchain, Brickken, Finance, Legal0 Comments

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