Whether you’re a seasoned crypto pro, hobbyist, or just crypto-curious, a white paper is a great tool to gain a deeper understanding of crypto in general and also to really understand a specific project or coin.
White papers can seem incredibly daunting, much like trying to understand if a hot dog is a sandwich, but once you start reading a few you'll feel more comfortable. Fortunately you don’t need to read every white paper out there. Just the ones for projects you find interesting or worthwhile.
If you don’t know what a white paper is, according to Wikipedia, it’s an authoritative report or guide that informs readers concisely about a complex issue and presents the issuing body's philosophy on the matter. In simpler terms, it’s just a paper explaining the problem a project intends to solve and and how it intends to do it. Kind of like a press release or an online dating profile.
So, why do you need to read the white paper? Aside from feeling morally superior to those who haven’t read it... “You mean, you haven’t read the white paper? I’ve been into the white paper since it’s early days… of twenty minutes ago.”
One of the most important reasons to read the white paper is to spot the wheat from the chaff, the bad projects from the good. The wise philosophers TLC said it best, “I don’t want no scrubs.”
When reading a white paper you’re looking for the following 6 things:
1. Does the project have a valid idea? What problem does this solve? Just because a token claims it can sync your pizza delivery with the start of your movie, while cool, that probably doesn’t actually need to exist. Or does it?
2. How will the project solve this problem? By hopes and dreams? Their roommate’s Costco membership? The whitepaper should explain how the team plans on solving this issue.
3. Does the team have the technical skills to execute the idea? If the team lists their experience as, “Yes,” this is a red flag.
4. How do they plan to execute the idea? By channeling the moon’s lunar cycles? Or by using an actual you know, plan.
5. What is the use for the blockchain? Yes, blockchain is a hot new term and it seems like everyone wants to put something on it. When reading the whitepaper ask yourself "does this really need to be on the blockchain?"
6. If the project is an ICO, what is the use for the token?
We know white papers aren’t wildly exciting, but it is worth the effort. And they’re usually only 5 or 6 pages long. You can do it! If after reading the white paper, you have no idea what the project is about or can’t explain it in a sentence or two, it might not be your attention span. It could be a poorly written paper.
But even if the coin or project doesn’t sound that great, you will have likely gained some new insight or picked up an impressive-sounding new crypto term you didn’t know before. You just leveled up your dinner party crypto conversation game!
So get out and there and read those white papers. If you don’t know where to begin, start with the bitcoin white paper. The one that started it all.
And we’re sorry to report, at least as of the time of this writing, no one has made stickers saying, “I read the white paper,” so you’ll have to snidely tell your friends yourselves.
*The Metalpay blog is for entertainment purposes only. This is not legal or financial advice.