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How to Analyze a Crypto White Paper for Investment


If you are going to make an investment in cryptocurrency project, you should analyze all the risks you take and the opportunities you get. Unfortunately, some crypto white papers contain fake data, which can convince you to make the wrong decision. If you don’t want to make a mistake, which will cost you a fortune, check the following pieces of advice.

How to Analyze a Crypto White Paper for Investment

Structure of a White Paper

Obviously, every crypto white paper is unique and it promotes exclusive ideas. But all of them have a similar structure. There are a few basic components of a cryptocurrency white paper:

  • The problem statement
  • An exclusive solution
  • Competitors and alternative solutions
  • Need for blockchain technology
  • Aspects of token issuance
  • Team and its experience.

Now it’s time to analyze every component in more details.

The Problem Statement

Maybe it sounds weird, but some companies struggle to solve non-existing issues. They try their best to create a problem, which will match their “brilliant” crypto solution. There is no room for a doubt that these companies offer the worst investment options ever.

So, reading a white paper, you should clearly understand what a problem is and why it’s so important to start solving it right now. Are there any trends in the economy, technologies, international trade or culture, which creates urgency? You should evaluate every single argument as attentively as possible.

An Exclusive Solution

When you understand a problem, you can analyze whether a company offers an optimal solution. Pretty often, cryptocurrency white papers contain a vague description of the idea. Lots of buzzwords and jargon make it difficult to get a clear vision of a solution provided.

If you have read a document 3 times but haven’t understood what it’s all about, then it’s time to send it to trash. Probably, this crypto investment is a suitable option only for people with vast knowledge in a specific IT niche. Or even worse, it’s a scam project, which will waste your money, so you should stay away from it.

Competitors and Alternative Solutions

Next, you should review information about the other alternative solutions, which exist in the market and which are under development. Why this very idea is better than others? Will this company successfully compete in the long-run time frame?

Blockchain project should also state all its strengths, weaknesses as well as define possible threats and opportunities. If this section of the crypto white paper reveals only positive aspects, it should wary you. Nothing is perfect, so if there are no disadvantages mentioned, then some important information is hidden from you.

Need for Blockchain Technology

Today, blockchain technology is overhyped. A problem is that many startups want to apply it, even when it isn’t needed.

For this reason, a crypto white paper should state why blockchain technology is so important for this concrete project. Probably, there is a necessity for smart contracts, certified reviews, blockchain identity verification, etc.

How to Analyze a Crypto White Paper for Investment

Aspects of Token Issuance

At this stage, you should get information about all the aspects of the token economy. There is a list of the tasks for you:

  • Identify the value and amount of the tokens, which company is going to issue;
  • Define when and how a company will sell the tokens;
  • Find out in which way company plans to partition them for sale, community and rewards;
  • Analyze the ways, in which company plans to spend the raised funds;
  • Consider the technical aspects of the tokens’ usage and distribution;
  • Evaluate the amount of the tokens allocated to founders.

Team and its Experience

Even if you believe that described idea is great, don’t hurry to make a final decision. Now you should analyze the skills and experience of team members. There are so many questions you should get answered:

  • Has team already completed some similar projects?
  • How long do team members work in the industry?
  • What education and background knowledge do they have?
  • How long team members work together? Do they know each other well enough?
  • Are there tech talents in the team?
  • Who is a project manager? Is he a true leader?

When you will finish reading the white paper, you should start googling. First of all, you should check LinkedIn profiles of all team members – this is the simplest way to see the real level of their professionalism.

Other Aspects to Consider

What is your overall impression of the crypto white paper? Do you think it was created by a professional or by an individual with low writing skills? It’s pretty hard to trust a company, which presents a poor-quality document, isn’t it?

However, it doesn’t mean that any white paper created by top writers guarantees the reliability of investment. Don’t let companies fool you with the beautiful words and dead promises. Evaluate every statement from a critical point of view.

Final Thoughts

Keep in mind that analysis of the cryptocurrency white paper is only the first step in the decision-making process. You shouldn’t hesitate to search for any additional information online. The more you will know, the better investment decision you will make.  


Disclaimer: This article should not be used as an investment or financial trading advice and reflects the personal views of the author. Please conduct careful due diligence before investing in any digital asset. The views, opinions, and positions expressed within guest posts are those of the author and do not represent those of Tokens24. The accuracy, completeness, and validity of any statements made within this article are not guaranteed. Tokens 24 accepts no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.



About the author

Daniela McVicker is a white paper writer and an editor at Ratedbystudents. She is passionate about studying the emerging technologies, robotics, and cryptocurrencies. Daniela loves to spend her free time...

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