In general, a white paper is recognized as a document that comprises an outlined set of problems related to a particular subject. It mentions a detailed description of the product or invention, its process architecture, and how it may interact with the customers in real-time.
It starts with an abstract or disclaimer containing limitations or notifications related to the product & its applications. The limitations refer to the laws enforced by the local bodies in a region that may not allow the use of that particular product there, so it is good to make readers aware that their investment may not always guarantee them profits.
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What is a Blockchain White Paper in Cryptocurrency?
A blockchain technology white paper intends to tell the investors & other interested parties about the plan of discussed cryptocurrency. An organization or individual launching a new cryptocurrency can prepare a white paper to convey all the technical, financial, and commercial information related to it comprehensively.
Cryptocurrency and Blockchain organizations utilize white papers as a marketing tool. Blockchain technology white papers provide customers a prospect to make decisions such as setting up direct communication between the cryptocurrency and the potential investors or other interested readers before the following process of Initial Coin Offering (ICO).
For a person or organization to invest in a cryptocurrency, the first thing they do is read out a white paper. In the upcoming sections, we will explain the components of a crypto white paper such as the Token Allocation and other important factors related to assessing any cryptocurrency.
Satoshi Nakamoto is the presumed pseudonymous name of the person who prepared the first crypto white paper, Bitcoin: A Peer-to-Peer Electronic Cash System. From the beginning of this paper, the author mentions a purely peer-to-peer version of electronic payments that would enable users to initiate online payments without any financial body participation like a bank in the process.
Why Does a Cryptocurrency Need a Blockchain White Paper?
A blockchain technology white paper in cryptocurrency demonstrates the objective and technological impacts on its investors. The founders or developers of the particular cryptocurrency prepare these whitepapers for marketing and brand awareness purposes that ultimately help them sell the crypto through Initial Coin Offering (ICO).
A blockchain technology white paper includes factual entities like diagrams, statistics, quotes, etc. A person with a particular interest in the subject prepares such technical documents. A white paper is a significant asset in cryptocurrencies as they validate the legitimacy of the product.
Although there are a few cryptocurrencies, many early such as Litecoin, had no white papers. But as ICO activity has gained immense popularity among market leaders, it alongside increased the prominence of white papers in the field. There are lots of instances where developers and organizations could raise millions of dollars in seconds through ICO.
To an extent, a white paper on blockchain technology enables a community of experts to assess ICO’s plan in a detailed manner. As ICO becomes a central topic of discussion for organizations, investors are using these papers before making any investments. Many investors firmly consider the quality of the white paper’s content as an image of the actual product here, a cryptocurrency.
What Does a White Paper Consist Of?
If we talk about a general blockchain technology white paper, it does not have any hardly specified structure that developers need to follow. An effective white paper on blockchain focuses on solving problems and clearing doubts of a potential investor about the product.
However, we can consider the below-discussed questions that may generally form a white paper’s content structure.
- What is the purpose of this cryptocurrency?
- Does this technology follow a business model?
- What prime issues would the technology resolve?
- What advantages does it seek over its competitors along with its USPs?
- What strategy would they plan to manage their funds?
- Is there any real utility possessed by a token?
- Would the project need a Blockchain?
- An introduction to all the team members & credibility of roles?
- What is the working prototype of the project?
A white paper cryptocurrency should include some general points in essence. If you look at some crypto white paper, you may find some familiar terms in each one of them, providing a standard explanation.
- Byzantine Generals Problem
- Digital Signature
- Double Spend
- Merkle tree (Merkle root, Merkle branch, and Merkle leaves)
- Moore’s Law
Future of Blockchain White Paper in the World of Cryptocurrency
With the ongoing phase of transformation in cryptocurrency, the Blockchain community may take over many conventional approaches that indulge more viable business strategies like bypassing the white papers.
The blockchain technology white paper stays as a technical version of a cryptocurrency. The ICO boom is also a significant reason why the white papers will remain a quantifiable choice of launching marketing campaigns before the developers crowdfund the cryptocurrency through ICO.
Since white papers exist on an open-source system, there are chances that they may become vulnerable to scammers, fraudsters, and cyber attackers to exploit the information resources to raise money without the consent of real contributors or developers. They perform such activities by making false promises or impersonating developers’ identities with no direct connection to the real authorities.
We tried to discuss everything related to the blockchain technology white papers & their increasing significance in developing cryptocurrencies. The person who developed the cryptocurrency does not need to author its white paper.
A trusted and competent person with adequate writing skills and knowledge of the technology can also frame every nook and cranny of cryptocurrencies in a comprehensive, interactive, and precise set of words and diagrams.
A crypto white paper should reflect a roadmap focusing on the crypto’s significant elements with styled & diagrammatic representation of facts in their ideal form. Blockchain white papers, along with blockchain Smart Contracts, are the most comprehensive features provided by blockchain technology.
Frequently Asked Questions
Few major checklist of all the things needed to include in Blockchain white paper are:
- Introduce your company.
- Introduce the problem.
- Spell out the solution.
- Detail how the solution works.
- Highlight the benefits of your solution.
It all started when the pseudonymous Satoshi Nakamoto published a white paper outlining a digital currency, secured by something called the blockchain.