Some people, especially for those who are just getting into the cryptocurrency and blockchain, almost never read the White Paper, so they can easily be influenced by various news and cannot judge whether the news is true or false. However, when you are preparing to invest in a blockchain project, the white paper is actually a very important part, especially for some new projects. So how can we judge the truth and false of the White Paper?
1. What is White Paper
First, you need to know what is the White Paper and what is the use of it? The white paper is an authoritative report or guide that can introduce a complex problem to investors in a concise manner, and put forward the concept of issuing institutions on this problem. It aims to help investors understand the problem, solve the problem and make decisions.
Let’s take the White Paper of ripple as an example, ripple’s White Paper focus on the problem of distributed payment systems, it put forward the shortcomings of the original algorithms solutions and then provide a better solution for that, all this can help investors know more about the project and then judge the ripple coin value.
2. How to thoroughly understand the white paper
2.1 The role of tokens
A good White Paper will explain why the currency was created. What is the purpose of this currency? How to achieve it’s purpose? A white paper that does not adequately explain the need for currency or provide details of how it can be implemented is skeptical.
2.2 The composition of the team
If the team members have no outstanding blockchain experience, if it is difficult to find additional information about the team on the Internet, it means that this team has at least just started, which is usually a bad sign.
2.3 The prospect of the project
As an investor, it is necessary to analyze whether the application scenario of the project is wide enough, whether it can be applied to the ground, and whether it meets its actual conditions. For example, I’m personally optimistic about the two blockchain projects, one is qtum, whcih is focus on smart contract, and the other is golem, which is focus on renting the idle power of the computer, both of the two projects have enough markets and are really realistic.
In addition, the number of communities, activity, attention, and acceptance of the project can also be considered. The higher the acceptance, the better the prospect of the project.
2.4 Whether the token is on the exchange
As a digital currency, tokens will be greatly reduced in value if they are not circulated, and the trading platform can enhance the circulation of tokens. Of course, trading platforms are also good or bad, and the digital currency that can go to large exchanges is bound to be safer. We can see that the top mainstream currencies are all on the big exchanges, so they are relatively stable, such as bitcoin, xrp, eth, usdt, etc.
2.5 The ratio of tokens
The ICO plan of the project is in the White Paper, the project party will describe in detail the total Token circulation, liquidity, private equity ratio, lifting cycle, percentage of team holding, lifting cycle, promotion ratio, etc., If the dealer holds a large amount of chips, then the possibility of the dealer raising the goods will be very high. Such a project is not recommended.
All these are my suggestion of reading a White Paper. You should analyse whether it is a goos project or not. Of course, when considering a project, the analysis may not only include these items. A high-quality project is bound to be perfect in all aspects and will stand all the tests. While a project that only wants to circulate money will also be full of loopholes. Everyone in the selection of a project must be careful thinking and meticulous research before deciding whether to participate in a project.