Blockchain technology and DeFi are rapidly growing at a constant rate, and their popularity and use cases are increasing day by day. With every passing day, we can see the emergence of a new blockchain initiative. Whenever a new blockchain or crypto project launches in the market, you often hear a term called “Whitepaper.” But we do not know its meaning and what information it provides about the new project. Let’s have a look at this commonly used concept. The whitepaper of Bitcoin – the most reputed cryptocurrency tradable like the Crypto Genius platform, is known as the gold standard of crypto whitepapers.
What Is A Whitepaper?
A whitepaper is a document issued by project developers that provides information about the technology being used and the overall objective of the project. It explains to its expected investors how the digital currency (coin/token) was formed and clarifies its objective. A crypto whitepaper comprises various types of data such as charts, stats, and formulas. This data aims to convince expected investors to invest in that particular digital currency. Any crypto project proves its professionalism and lawfulness through the whitepaper. It assists crypto investors to comprehend how the project distinguishes itself from the other projects in the crypto world.
Things You Need To Know Before Understanding A Whitepaper
To understand a crypto project, reading its whitepaper is consider the most effective thing. But many people do not even know how to read it because it is not that simple specifically for the ones who are not much aware of the blockchain and other associated technologies. The positive aspect is that you are not required to hold a CS degree for understanding a whitepaper. It is mandatory to learn a few crypto concepts, which are following;
If you learn the above-mentioned things, it would be much easier for you to have a better understanding of a specific whitepaper.
What Does It Include?
● The Challenge & The Solution
This part of the white paper explains what and where the problem is and what and how the project will provide a solution to the problem. The solution offers a complete product description and market analysis to determine the actual requirement of the product and ways of fitting it in the current market.
● Coin Information & Market Consideration
When beginning an Initial Coin Offering, there is particular information that is crucial for investors to receive. It includes complete data about the latest crypto coins like what is their value, their circulating quantity, and their running platform. A whitepaper must include the redemption process and the information about the consequences if the Initial Coin Offering fails to achieve its targets.
● Technical Explanation
It is an important section of the crypto whitepaper that describes the technical aspects and provides information about the technology being use in the project.
● Consensus Mechanism
This part of the whitepaper shows which consensus mechanism i.e. the POW or the POS or their variations, is being use in the project to process the transactions.
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● Timeline
This section describes the operational plan of the project for the upcoming months. It tries to explain what will happen, when and how the sales will begin, and when the coin will be release. In short, it provides a roadmap for the working of the project.
● Project Team & Advisors
This section provides information about the project developers, founders, employees, and advisors. Similar to the technical aspects, it is also an important factor as it tells about the team’s expertise and also shows whether the team is relevant to the project or not.
Conclusion
These are some of the significant factors that are require to read and understand a crypto whitepaper, but they are not the only ones. For a better understanding, one should also know about the factors that are not present in the white paper, such as the background of the founders or developers and the Tokenomics strategies.
