Vital Whitepaper Research Can Make You A Better Altcoin Investor
Whitepapers, you probably see them all the time, but do you actually read them? Blokt have recently published an article that discusses the importance of reading whitepapers when deciding to invest in new cryptocurrencies and itâs a sentiment that we want to reiterate.
We only ever encourage safe and thought out investment, reviewing whitepapers is one way that you can ensure your research is valid and informed, as ultimately, whitepapers set out to highlight absolutely everything about the token and the project it represents. Whitepapers should contain all technical information about the token, actual financial projections and commercial information too. The whitepaper is the first thing you need to explore in order to rate and understand the legitimacy of the project. If the whitepaper doesnât help you then itâs probably a project you want to shy away from.
Of course, whitepapers arenât a required part of cryptocurrency projects. Companies donât need to produce whitepapers and tokens donât need to be backed by them. It is however an industry standard that some form of written document is produced alongside tokens and projects that are designed to host all of the fine details, it would be suspicious if a project did not have some sort of supporting documentation, therefore if you canât find a âwhitepaperâ or something like that at least, again, itâs a project youâll probably want to avoid.
What to look out for?
Whitepapers are long and often quite boring. There are a number of key things to look out for when reading whitepapers, hopefully this at the very least will make your whitepaper research a little less tedious. Firstly, one of the most important things to ready about - technology.
A good whitepaper will feed solid information about the technology backing the project. The whitepaper should offer a problem and provide a solution and generally, should be backed by technology that makes the project worthwhile. If itâs a token you want to invest in, ensure itâs technology is up to scratch and most importantly, ensure itâs futureproof.
According to Blokt, another key area to explore is the roadmap, all good whitepapers will include a roadmap or a timeline on which will exist a plan for the future:
âTechnical development always takes longer than promised, but a roadmap gives you an idea if theyâre realistic about their goals. If the roadmap states that a mainnet will be delivered within a few months, that would be great, but could also indicate that theyâre trying to make a quick buck (unless the started the development way before the ICO of course).â
Other key areas to explore will be the development team, who is involved in the project? The token use and allocation, who is using the token, why is it being used and how is it being allocated? References to partnerships, banks and exchanges are key too, is this a project that is starting fresh, or do they already have industry contacts?
What we are trying to say here, is that although they are often boring, hard to read and a little bland, whitepapers should be a key part of your research. If you want to invest in a new project or altcoin, find the whitepaper and make sure it is right for you, this way, youâre simply just protecting yourself from the volatility of cryptocurrencies. Reading whitepapers will in turn allow you to make better investment opportunities, that can only be a good thing.