Importance of White Paper when analyzing an ICO

Posted by Arinhuk on March 28th, 2019

In the present review, we will highlight the importance of the Crypto Whitepapers (Technical Document) when analyzing an ICO, which should provide elementary information of the new cryptocurrency. Once a Technical Document is analyzed, it will give us enough power to determine if the ICO represents a good investment, or if on the contrary we should not get involved.

The objective of the ICO (Initial Coin Offering)

As is known, the ICO (Initial Coin Offering), aims to raise funds from investors, so that developers can carry out a new cryptocurrency project. An ICO presents a coin or token for sale, usually at a promotional price; these tokens are generally purchased by investors with BTC or ETH and can be purchased in some cases with fiat money.

It is important to emphasize that together with the launch of the ICO, the "Technical Document" must be published, which in some cases is also cited as "White Paper". In order to have knowledge of the ICOs that are going to appear, there are specialized sites such as Con schedule, Icoalert, and Foundico, which provide basic information of said ICOs and publish direct links to the Technical Document of emerging cryptocurrencies.

Aspects to take into account when analyzing a White Paper

A Technical Document must provide technical information about the project, as well as the goals to be met. Although there is no standard or universal structure of what a Technical Document should contain, here are a series of aspects to take into consideration when analyzing the Technical Document:

Overview of what the project consists of: The project must start from a good idea, it must be congruent and realistic. It must show new features and/or features that make the difference regarding how a problem is currently solved.

The degree of progress in which the project is located: Many ICOs do not go beyond being simple sketches. The problem to solve. It should raise a current problem and explain how implementing the use of the cryptocurrency to promote, that problem would be solved.

Advantages of its use: You must tell us why it would be advantageous to implement its use, compared to those cryptocurrencies that are currently in the same line.

Source code: You must present the source code or in its absence a direct link to your source code through the ICOtoplist site. If it does not appear on this site, it is perhaps because developers still do not have coding ready for the project. Publicly presenting the source code and technical details give transparency to the project.

Ways to make money: You must report about the ways in which buyers can make money with it. Also, inform if there are any kind of bonuses or rewards with its use.

Hard Cap, Soft Cap: It should show what is called in the jargon of cryptocurrencies, the "hard cap" and the "soft cap". The hard cap is the maximum number of coins or tokens that will be available in time. The soft cap is the minimum number of tokens that must be sold for the ICO to be successful.

Token prices: Prices during the ICO and at the end of it

Roadmap: Inform the different stages that the ICO will meet as reflected in the time. You should give detailed information on how the plan will be executed in the next 12-18 months.

Deposit in the guarantee of the project: This refers to a guarantee that protects the investors in case the ICO fails so that the funds invested are returned to them.

Technical team: It must present the team that develops the new cryptocurrency, as well as a brief biographical review or curriculum, usually accompanied by direct access to the social networks of the people who make up the technical team. This information must be verified in Google, social networks, forums, among others.

Once some aspects to be considered when analyzing the Technical Document have been presented, it is necessary to limit, that what the Technical Document says should not be trusted at face value.