In the context of digital currencies, so called White Papers are technical documents, prepared prior to the launch of a cryptocurrency or blockchain based project. It contains all the necessary features and details, including technological, commercial, financial and other valuable information so that a user can decide whether to invest in such an initiative, or whether or not to buy a certain virtual currency.
Four things to keep in mind
The truth is that White Papers has been used for a long time and in various fields; both in the field of business, marketing, technology, as well as to develop and explain problems and solutions. Linked to cryptocurrencies, this is a key element of the so-called ICO (Initial Coin Offerings).
But... like everything in this world, they can also be used to sell smoke, that is, nothing. Tomorrow maybe the Punky Dunky Funky White Paper comes out, although that does not imply that all its content is solid and based on something concrete, real. Maybe Punky Dunky Funky never even exists. Hence the importance of not taking what you read as true, even if it is a white paper. You need to analyze and question every document you find.
Satoshi's original conception regarding the Bitcoin protocol came in White Paper format. It also appeared in the form of a white paper what would be the next big blockchain platform, Ethereum. The same with many other very popular cryptocurrencies. But be careful! Fake cryptocurrencies and projects may also have their own White Papers.
There are a number of fundamental questions, which should be answered when reading a White Paper. Let's see some of them.
1 What is the project about?
To determine the legitimacy of a document about a cryptocurrency, it is inescapable to really understand what exactly the project does or proposes. While this seems easy to identify, it is not at all.
White papers are often confusing and riddled with technical jargons, formulas and terms never seen before, especially for an ordinary user. In case this question cannot be answered by the White Paper user, there are basically 2 possibilities:
- You need more training or knowledge to fully understand it
- The project does not exist and they are pure words, dead theory that will not reach any real port
Before investing in any cryptocurrency or associated project, you should understand what it is about. If not, what is the point of investing? We would already enter the field of speculation, it would be luck and truth. In this sense, neither take the words of Reddit, Telegram or Twitter users as sacred.
2 How does the project work?
If it is really and truly proposing something, it is also important that the white paper sets out how it will work, through what types of technology. A good example of White Paper is that of Bitcoin: It is one of the most understandable and readable, it is not very long, in contrast to many modern white papers. If you have never read it, it is a good place to start.
The document should also be able to explain what problem the project will solve and how, as well as answer: who needs this project, why, what for?
3 Who is behind the project?
It is essential to do background research: who are the team members, what is their experience, training or background, what other things have the developers and promoters of the project done, etc.
4 Why does the project use blockchain technology?
After reading the document, it should also be understood why the proposed initiative aims to use the blockchain.
Some projects simply mention the term "Blockchain" as a caller, when in reality they are just web applications like others and do not require the use of this technology. If you read things like, for example, "... a novel blockchain project to spend less fuel", or "a blockchain to accelerate laundry ...", be suspicious.
In short, always be wary of what you read and analyze on a case-by-case basis. That it is an official or white paper does not imply that this project or cryptocurrency will come to light.
To finish, here I leave you the links of a website that brings together almost all White Papers. HAPPY PAPERS!
Thanks for your time and dont forget to follow me (please) HERE