What is a Whitepaper?
A whitepaper is a document that provides readers with information about a particular topic or issue. In blockchain technology, a whitepaper is a crucial tool that outlines the technical specifications and features of a cryptocurrency or blockchain project.
Whitepapers are also used to present government policies and legislation and gauge public opinion.
Commonly, a cryptocurrency whitepaper includes essential data, such as statistics and diagrams, as well as an overview of the project’s governing structure, development plans, and the team working on it. However, there is no standard format for a whitepaper, and each project creates one that best fits its unique needs and conditions.
It’s important to note that whitepapers should be neutral and informative rather than persuasive. A whitepaper isn’t a product pitch deck. Investors should be wary of whitepapers that promise too much without providing enough information.
In many ways, cryptocurrency whitepapers can be considered business plans for crypto projects. They provide potential investors a comprehensive overview of the project before its launch. Unlike business plans, whitepapers are usually released before the cryptocurrency is launched, making them a starting point for the project to communicate its direction and goals.
Why Is It Called a Whitepaper?
The term “White Paper” originates in 19th century Britain, where Parliamentary reports were covered in blue. However, when a topic was deemed less serious, the blue cover was removed, and the report was published with a white cover. These reports came to be known as White Papers.
In the United States, government whitepapers typically refer to background reports or guidance on specific issues.
In the context of cryptocurrency and blockchain technology, as we mentioned above, a whitepaper is a document that outlines the technical specifications and features of a project, similar to how a traditional white paper provides information on a particular issue or topic. The term “whitepaper” has been adopted in this context to reflect the informative and educational nature of the document.
Why are Whitepapers Important?
Whitepapers play a crucial role in the crypto ecosystem. Although no set standards exist for creating them, they have become a valuable tool for researching crypto projects.
For beginners, it’s often recommended to start their crypto research by reading the project’s whitepaper. This helps users identify potential red flags or promising projects, allowing them to monitor if a project adheres to its original plans and goals.
By publicizing a project’s key information, whitepapers provide transparency and equality to various parties. Investors can make more informed investment decisions, while developers can determine if they want to participate in the protocol. Similarly, individuals interested in the idea can confidently decide if they will join a particular community after reading the whitepaper.
What Information Can You Find in a Whitepaper?
In a whitepaper, the founders of a cryptocurrency or blockchain project outline the project’s goals and provide an understanding of its purpose. For example, Bitcoin’s whitepaper describes its goal as “a purely peer-to-peer version of electronic cash,” while Ethereum’s whitepaper outlines its intent to “create an alternative protocol for building decentralized applications.”
Whitepapers are typically based on extensive research and analysis, presenting facts and figures that are supported by reliable sources. They often include visual aids like charts, graphs, and tables to help readers better understand complex information.
Whitepapers can also provide insight into the real-world utility of the project and how it can solve specific problems or improve certain aspects of our lives. However, it’s essential to approach whitepapers cautiously, as not all projects deliver on their promises.
In addition to goals and promises, whitepapers also explain how the cryptocurrency or blockchain project will work. For example, they may describe the consensus mechanism used to coordinate network participants in a distributed way.
Whitepapers may also contain detailed information on tokenomics components, such as token burns, token allocations, and incentive mechanisms. Finally, they may provide a roadmap outlining the project’s development timeline.
While whitepapers are designed to be easy to understand, a good whitepaper will also provide technical explanations to confirm the project’s competence.
Key Components of a Crypto Whitepaper
The main components of a crypto whitepaper include:
- Table of Contents: a summary of the sections included in the whitepaper.
- Introduction: an overview of the project, its purpose, and its potential impact.
- Functionality: a detailed explanation of the project’s work and technical specifications.
- Consensus Mechanism: an explanation of how the project achieves consensus among its network participants.
- Real-World Examples: how the project can be used in real-world scenarios and how it can solve a particular problem or challenge.
- Diagrams: visual representations of the project’s architecture and technical processes.
- Conclusion: a summary of the project’s key points and potential impact.
It’s worth noting that not all crypto whitepapers follow this exact format, and some may include additional sections or information. The structure of a whitepaper should be tailored to the specific project it describes.
How to Write a Crypto Whitepaper?
Writing a white paper can be a complex process, but by following a few key steps, you can create a compelling document that effectively communicates your ideas.
Starting the process
To get started, it’s important to include a legal notice or disclaimer at the beginning of the white paper. This will inform readers of any significant restrictions or notifications related to your project, such as regulations that limit who can invest or disclaimers about potential profits.
After that, a strong introduction is crucial for grabbing the reader’s attention. Consider presenting it as a letter from the CEO addressing future token holders and outlining the problem your project intends to solve. Please explain why this problem is important and the consequences of not solving it while highlighting the benefits of reading the document.
Since a white paper is typically a technical document, it’s essential to make it easily accessible and navigable. An informative and well-structured table of contents can go a long way in achieving this, as can the inclusion of a glossary for any technical terms.
Discussing Your Project in Detail
Take the time to explain your project thoroughly and show potential investors where it fits in the current market. It’s crucial to clarify what the project is and its various components.
In order to substantiate any numbers you present in the whitepaper, you should provide research, facts, or analysis.
Project Status
This section should provide a comprehensive overview of the project’s current status, including prototype data, first users, development strategy, and overarching goals.
Serious investors will likely support projects with an established ecosystem and user base, increasing the likelihood of the token’s survival in the market. If you have any of these elements, mention them clearly.
Financial Aspects
A significant portion of your white paper should outline the project’s finances. You should be able to explain why your project requires its own tokens, when and how they will be distributed, whether token issuance for the ICO will be limited, when sales will commence on the market and other relevant topics.
Use of Funds Plan
Investors must know where their funds will be directed and how much money the project will require to complete essential tasks.
Most importantly, the white paper shouldn’t mention items of expense such as “networking event,” “industry development,” “miscellaneous,” and so along. Your whitepaper should undoubtedly state that all the money gathered will be spent on development and nothing else.
Roadmap
The whitepaper should include a comprehensive technical description of the project as well as a development roadmap. Ideally, a detailed action plan for the next 12-24 months should be included, including at least one beta launch.
If any roadmap tasks have already been accomplished, highlight them in the white paper, as investors will see it as a significant advantage.
Introduce the Team
The project team plays a crucial role in the success of any ICO. The anonymity of the development team is rarely acceptable. In this section, you should showcase the human aspect of the project by including photos and short biographies of the team members.
It’s not enough to just list the team members’ names and titles. Explain why they are crucial for the project’s success and how their previous experience will contribute to its development. If any of the team members have worked on blockchain or cryptocurrency projects in the past, mention it.
Remember to include information about project advisors, but avoid mentioning irrelevant names. The advisors should have expertise in the area your project aims to address.
Writing Guidelines
When creating a white paper, it’s essential to adopt a formal and professional writing style that’s descriptive and focused. Avoid rambling about future possibilities and concentrate on the specific task. For instance, if you’re introducing party hats on the blockchain, emphasize how tokens will be utilized to update them or get them a fresh coat of paint. Ensure the white paper is factual, avoiding unverified claims, assumptions, and guesses. Moreover, proofread the document to eliminate grammatical and spelling errors while also verifying all facts. Proper formatting is necessary to maintain a professional appearance. If you plan on translating the white paper into multiple languages, engaging a professional translator is best.
Where to Post Your Crypto Whitepaper
In the past, some successful ICO campaigns were shared on Bitcoin-related forums with the white paper as the thread’s first message. However, as the popularity of ICOs has increased, most projects now prefer to post their white paper on their website. While other options like GitHub and forums are still available, having a single central location for your white paper is important. Avoid copying and pasting it on multiple platforms. Instead, share a link to it when promoting your project on various forums and websites.
Examples of Crypto Whitepapers
To see how the theory outlined in this article applies in the real market, below you can see whitepapers of some well-known crypto projects:
