What Is a Cryptocurrency Whitepaper? [Everything You Need To Know!]
If you’re thinking of investing in a certain cryptocurrency, then the absolute first thing you should do is head to the coin’s website and read through its whitepaper! Crypto whitepapers are written to give potential investors information regarding a cryptocurrency’s project, goals, and future plans.
These documents are highly important and can help you to separate the good coins from the bad ones. For instance, if a cryptocurrency has a whitepaper that looks incomplete or unprofessional, you can assume that the team is not taking its project as seriously as it could be. On the other hand, if the team has carefully outlined all technical details and features of their project, then it is a good sign that this crypto may be a worthwhile investment.
Keep reading to find out what a crypto whitepaper is, how to find one, and why thoroughly reading them is so important for traders who are thinking about investing in particular coins!
What Is a Whitepaper?
A whitepaper is a document that outlines the features, technical aspects, use cases, and goals of a cryptocurrency project. These useful documents have been designed to serve as a guide for investors and incentivize them to invest in the team’s coin. The best crypto whitepapers will be comprehensive, well-written, and easy to understand.
The most famous example of a cryptocurrency whitepaper is the Bitcoin whitepaper titled Bitcoin: A Peer-to-Peer Electronic Cash System. This whitepaper was published in 2008 by Satoshi Nakamoto and introduced the world to Bitcoin for the first time. The Ethereum whitepaper is another well-known example published in 2024 by the coin’s founder, Vitalik Buterin.
What Information Does a Whitepaper Contain?
Whitepapers usually contain information explaining the team’s goals for their crypto project. They will describe what problems the project aims to solve and its real-world use cases, giving the cryptocurrency more credibility. Some teams also introduce themselves and clarify their role in the project.
Additionally, whitepapers sometimes include a roadmap that shows key milestones the team aims to meet, as well as the economics of the cryptocurrency. For example, in the Big Eyes whitepaper, the team explains their two-stage plan of action, which includes a token audit, pre-sale, influencer campaign, charity donation, and NFT launch.
To summarise, here is a summary of the information you should ideally find out from reading a crypto’s whitepaper:
- Why the project was created;
- Who is the team behind the project;
- What are the technical aspects of the project;
- What is the project’s real-world utility;
- How coins are being distributed;
- What is the timeline of the project;
By discovering this information, you’ll have a much better understanding of the cryptocurrency project and can make a more informed decision when deciding whether or not to invest in it.
Why It’s Important To Read a Crypto Whitepaper
Reading a cryptocurrency whitepaper is critical as it is the best place to find in-depth and technical information about the project. It can answer any questions you might have about a cryptocurrency and help you decide whether the coin is a good investment decision or not.
If you find a coin that you’re interested in trading, then your first step should be to head to the official website and read through the whitepaper. After this, you can take other steps, such as searching for mentions of the coin on social media platforms to discover the community’s opinion. You should also head to a crypto marketplace such as CoinMarketCap to find out more information, including the coin’s current price, market cap, volume, and circulating supply.
Once you’ve followed these steps, you’re likely ready to determine whether or not you want to invest in a particular coin. If you have decided that a coin is a worthwhile investment, then you have several options. For first-time and inexperienced traders, it’s recommended that you start by signing up for a crypto platform to be automatically matched with a broker. A crypto broker acts as a middleman between traders and the cryptocurrency market. They will help you to confidently buy and sell crypto and create a diversified trading portfolio.
Many brokers offer a wide selection of tools and resources that have been designed to help give beginner traders all the support they need. So, if this is your first time trading, or you feel like you need additional guidance, then you should begin trading cryptocurrency by signing up for a crypto platform! After this, you’re free to invest as little or as much as you like and continue searching for new cryptocurrencies to flesh out your portfolio!
Where Do You Find a Cryptocurrency Whitepaper?
Typically, you’ll find a crypto whitepaper on the official page of any cryptocurrency coin. Whitepapers are usually documents in the form of a PDF, but this can vary between projects. Some whitepapers are simply plain text documents, while others may include graphics, diagrams, photos, and even video clips.
It’s important to keep in mind that just because a crypto whitepaper looks professional, it does not necessarily mean that the cryptocurrency is a good investment option. The development team behind each crypto will do their best to make their project seem innovative and useful, but this may not always be the case. Even if they state that their coin has real-world use cases, it doesn’t mean that it will necessarily become widely adopted.
Always do your own research alongside checking out a crypto’s whitepaper, and take everything you read with a pinch of salt! All research whitepapers are analyzed in Crowdwisdom’s Prediction articles
All in all, reading a whitepaper should be your first step when choosing a new cryptocurrency to invest in. These documents are the best place to find out all the information you need about a crypto project and the team behind it. It is vital to meticulously read through the whitepaper of any coin you are considering buying, as it will help give you a better idea of the project’s technical aspects and potential future.
However, it’s equally important to remember that not all whitepapers can be trusted, as anyone can write one. Even if it looks professional and carefully written, you should still be cautious and take other steps to verify the legitimacy of a crypto project. This can include heading to a coin marketplace or looking up the crypto on search engines or social media platforms such as Twitter, Discord, and Reddit.