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 it’s 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 doesn’t help you then it’s probably a project you want to shy away from.

Of course, whitepapers aren’t a required part of cryptocurrency projects. Companies don’t need to produce whitepapers and tokens don’t 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 can’t find a ‘whitepaper’ or something like that at least, again, it’s a project you’ll probably want to avoid.

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 it’s a token you want to invest in, ensure it’s technology is up to scratch and most importantly, ensure it’s 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:

“Technical development always takes longer than promised, but a roadmap gives you an idea if they’re 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 they’re trying to make a quick buck (unless the started the development way before the ICO of course).”

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, you’re 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.

Blokt