What is a White Paper?
A white paper is a detailed explanation by a cryptocurrency project of what they are building and what problem they are solving. Technical, financial and commercial information about the project is explained in this document. Normally they aim to provide a document that explains in plain language what they’re planning to do, to attract investors and other interested parties. The Whitepaper is usually accompanied by a One Pager, he project summarized in one page, and a Position Paper, which details the competition and their (better) position in comparison with the competition.
Some companies do not have Whitepapers, but bring out a Blackpaper, Litepaper, Pink Paper or they just do a video explainer or presentation.
If you thinking about investing in a cryptocurrency that is doing an ICO (Initial Coin Offering) or any other crypto project, your first stop is reading the Whitepaper. Especially information about the their solution to a specific problem, the Token Allocation, the Team behind the crypto and the roadmap are important factors in assessing a cryptocurrency.
The first and most popular cryptocurrency Whitepaper is the Bitcoin Whitepaper: Bitcoin: A Peer-to-Peer Electronic Cash System by Satoshi Nakamoto.
This is the abstract of the Bitcoin white paper, just to give you an idea what the content of this site is about:
A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution. Digital signatures provide part of the solution, but the main benefits are lost if a trusted third party is still required to prevent double-spending. We propose a solution to the double-spending problem using a peer-to-peer network. The network timestamps transactions by hashing them into an ongoing chain of hash-based proof-of-work, forming a record that cannot be changed without redoing the proof-of-work. The longest chain not only serves as proof of the sequence of events witnessed, but proof that it came from the largest pool of CPU power. As long as a majority of CPU power is controlled by nodes that are not cooperating to attack the network, they’ll generate the longest chain and outpace attackers. The network itself requires minimal structure. Messages are broadcast on a best effort basis, and nodes can leave and rejoin the network at will, accepting the longest proof-of-work chain as proof of what happened while they were gone.
How do you write a white paper?
A standard whitepaper on any cryptocurrency project contains the following elements:
- What is the problem you have encountered?
- How are you going so solve this problem?
- What is your (technical) solution to that problem? e.g “We are going to use blockchain to build a registry of whitepapers”
- What is the use of your cryptocurrency?
- How are you going to raise funds? For example, through an ICO, STO or IEO.
- How are you going to use these funds?
- What is the token allocation? Meaning, how many tokens are being sold to investors, used for marketing, paid to the team etc.
- What team is behind the project? What is their experience?
- What is the roadmap of your project?What are the development phases?
In short, the above elements will get you started with writing a whitepaper. Of course there are many other elements you could add, more info is always good!
In what format should a whitepaper be?
In our opinion, the best format for a whitepaper is the Bitcoin whitepaper format. It still is the best way to explain the technology behind your project and it looks clean and professional. The great thing is that you can highlight your whitepaper abstract on the first page, just like the example below, and use some keywords. The Ethereum white paper and Ripple white paper also used the same format. Don’t use too much colors, graphics etc., unless you are targeting a specific audience. In our experience, the biggest projects all have a clean looking whitepaper. Below an example of Ripple’s whitepaper, which is a great example of how much information you can give away on your first page in a clean overview.
Make sure you tell the truth in your whitepaper. There is no need to make things bigger than they are or claim things that aren’t finished (yet), like partnerships and approvals from authorities. The same goes for any graphics and content you use from third parties, this should be your own work or properly credited. Your potential investors will do their own research and review your whitepaper, so is has to be to the point, self-explanatory and people should feel excited to contribute to your goals.
Thanks for reading!
Ps. If you liked this article, let us know and we’ll blog more often on how to’s regarding whitepapers!
Photo credits: Alexey Sokolov