When you are looking to sign a contract or a deal with an organization or individual, it is essential to have a written document with each party’s signature to confirm and seal the agreement. However, you may need to be patient before agreeing to sign the contract. That is, you should carefully examine the document to know what binds you to the document, what you’re expected to do to hold your sign of the bargain, what to expect from the other part, assess the benefits and the risks, be certain that it is not detrimental to you. Failure to carefully scrutinize these documents may end up in a huge disaster. And this applies even to investments and cryptocurrency projects. What should you expect from the investments, who are the project developers, are they ghosts or real? All these questions and more are important before embarking on investments.

In the crypto network, there is a document that has to list all of the details that a crypto project entails in understandable terms. It enlightens investors on everything the project is about including the team members. This document is called a whitepaper. As an investor or user, if you have not gone through a crypto project’s whitepaper, it is better not to stake anything on it, because that could be likened to running heads-on into danger. How can you risk your assets on something you have zero knowledge about?

While you may be thinking of relying on the information you have seen here and there, or word of mouth, it is safer to get your hands on the project’s white paper and analyze it yourself. You might be wondering what you are supposed to check out for and how to know the information you’re getting is real, that is the purpose of this article. This guides your crypto investment decisions and helps you identify all you need to look out for.

What Exactly is a White Paper?

It is important to note that a whitepaper is not only peculiar to cryptocurrency, it is a general report that gives details on a matter to whomever is interested in knowing. It can be referred to, as a guiding script, that seeks to pass down knowledge to users about a certain product. The contents of a whitepaper can be in varying standards depending on the type of product being discussed. It is widely used by organizations, startups, product developers, and in cryptocurrency.

Whitepaper in crypto is in plain terms, a report that explains the essential information of a blockchain project. Its content usually includes the goals of the crypto project, the features, economic value parameters, project participant or team’s details, and the products offered. They may consist of visual representations of analyzed data or diagrams in various forms.

The core function of this document is that it summarizes the entirety of the project from what it does to the problems it solves, and how it works. Every essential information about the project, financial, technical, and commercial, is included in this whitepaper.

What to Look Out For in Cryptocurrency Whitepapers?

With this knowledge of the whitepaper, what are the specifics to look out for in this document? A whitepaper might be a broad read, but let’s look at the major things we can check to identify the authenticity of a cryptocurrency project.

The project purpose: This must be spelled out in a whitepaper in clear terms. You must be careful of some huge technical grammar utilized in this report, to confuse readers. If a whitepaper fails to explain its purpose to users in clear and understandable terms, the credibility of such a document should be checked.
Problem-solving ability: There are varieties of existing crypto projects already, if a new one is coming, then it must be filling a niche that is yet to be filled. What is the project proffering a solution to? This is an essential check in a crypto whitepaper. This will define the project's marketability and why users should accept it when launched.
How does it work?: beyond stating its problem-solving ability, the whitepaper should provide information on how the project works, and how it profers the solution intended. This section should also include the tokenomics, that is token economics of the project.
Project developers and their intentions: The white paper should provide relevant information about the team members behind the project. This is essential to double-check the credibility of the crypto project. With this information, run a personal background check on the core members of the team to ensure that they are real people. Also, you should check out for their intention or motivations in the development of the project.
Double-check: This final step might seem like a little extra, but there is no limit to research, especially when asset risks are involved. As much as it may be important to get all this information from the white paper, do not solely depend on the content of the white paper to make our decisions, run a confirmation test on all the information gotten and make sure they are real before finally accepting the project.

Conclusion

While reading a crypto project’s whitepaper may be a time-consuming activity, it is essential to make this sacrifice. It has proven to be one of the best ways to know about crypto projects. In doing this study, you must take the time to understand terminologies and also compare the project scope with existing projects, to understand further. Overall, run a background check on all the information you get from the whitepaper.