If you have spent any time in the cryptocurrency space, or looking into ICOs, you know that the process revolves around “the white paper.” The white paper is a document that lays out facts about the blockchain, protocol, or dapp that is being built, and describes how the tokens will work. Sometimes it is a deeply technical document. Other times it is mostly marketing. I think it is mostly irrelevant.

Cryptoinvestors love white papers, although, I’m not sure they really read them. Mostly they skim them and then ask “why can’t you do this with a database instead of a blockchain?” It’s a valid question. Of course, it’s also a valid question why you even need a database. You could use a spreadsheet instead, or even a comma delimited file. Or you could in fact chisel your ledger on stone tablets too.

Most cryptoinvestors don’t ask good questions. In fact, most crypto forums are filled with posts of people asking the same thing over and over, or issuing the same 3 or 4 criticisms of blockchains that they read somewhere else. But blockchains, and the general concept of decentralized systems, unlock a lot of new cool possibilities. And the way to understand those isn’t to evaluate the technical merits of a blockchain via the whitepaper. It’s like evaluating Amazon’s e-commerce capabilities based on their low level server infrastructure design.

Blockchain technology is early, and as such, it should be evaluated more like the way startups are evaluated. And focusing on the underlying technology via the whitepaper is akin to looking primarily at a startup’s architecture diagrams to decide if you should invest. It makes no sense. It’s one small data point out of many.

The thing token buyers are missing when they look at a whitepaper is that the blockchain under consideration will almost certainly change. Why? Because technology changes. Use cases will expand. Other blockchains will compete for attention. In other words, innovation happens and there is no reason to think it won’t happen to blockchains. What you really want to think about then, is how that happens for the dapp/blockchain/network you are evaluating.

I think it is much much better to evaluate a blockchain the way you evaluate a startup — you assume the starting point is a starting point, not an end point. Crypto buyers seem to me to evaluate a white paper like a final product, and that is where they go wrong. When I look at crypto deals, I think about a different set of things. I think about where they are starting and where they are likely to be in a decade, and the path to get there.

If you want to evaluate opportunities that way, here are 4things to consider.

Team — This is what I look at first. Building a network is HARD. Can this team attract partners and participants? Most of the ones I see are doubtful. I look for a team that isn’t just a bunch of super techie blockchain dudes. I want to see business people who understand marketing and evangelizing. Vision — Where is this network going? What are the possibilities past the first use case? The more a network can do long term, the more valuable it will be. Scope — How broad or narrowly defined are the use cases for this blockchain? This is a hard one, and it is similar to how one might evaluate a new software application. Too broad and the messaging/positioning get diluted. The tool gets eaten alive by more focused competitors. Too narrow and targeted and the tool owns a small niche and never grows out of it. Scope of a blockchain’s use cases is a major criteria for me. New vs Existing Market — I know my opinion here is in the minority but, I just don’t believe blockchains are going to disrupt most existing markets. The entrenched ecosystem has no incentive to change. Instead, I think they are going to enable new markets where trust was difficult before, and now it is possible. I’m down on blockchains for things like real estate.

So, the next time you look at a token or a network, just skim the whitepaper. Make it a secondary factor in your decision, not the primary thing you buy on. Spend your time instead looking at the team, understanding the big vision, researching the market opportunity, and thinking counterfactually about the possible futures of the network. You’ll make better decisions.