In the blockchain domain, a whitepaper is a document that outlines the core features and technical specifications of a particular cryptocurrency or blockchain project. While many whitepapers focus on token projects, they may also cover different types of projects, such as decentralized finance (DeFi) platforms or blockchain-based gaming projects.

Whitepapers may outline basic data in the form of statistics and charts. Additionally, they may introduce the project's governance structure, operators, and current and future development plans (i.e., roadmap).

Cryptocurrency whitepapers provide investors with a comprehensive overview of the project, making them akin to business plans for cryptocurrency projects. However, unlike business plans, whitepapers are often released before the cryptocurrency is launched. Therefore, whitepapers serve as entry points for understanding the development direction and goals of cryptocurrency projects.

What information does a whitepaper provide?

Project founders present their project goals in whitepaper format. For example, the Bitcoin whitepaper states: "A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution." Ethereum's whitepaper explains its goals as follows: "Ethereum intends to provide a blockchain with a built-in fully fledged Turing-complete programming language that can be used to create 'contracts'."

Whitepapers typically describe the practical utility of cryptocurrency projects in the real world, such as how the project addresses a specific problem or improves certain aspects of our daily lives.

Whitepapers also detail the token economics of the project, including token burning, distribution methods, and incentive mechanisms. Additionally, whitepapers often include a roadmap for users to understand the project's development plans and product release schedule.

To ensure widespread understanding, whitepapers are usually written in a concise manner. However, an excellent whitepaper also provides technical explanations to demonstrate the project's feasibility and technical capabilities.

Why are whitepapers important?

Whitepapers are crucial for the cryptocurrency ecosystem. Although there is no uniform standard for creating whitepapers, they have become a research framework for cryptocurrency projects.

Therefore, it is generally recommended that users read the project's whitepaper as a starting point for researching the cryptocurrency. With the help of the project's whitepaper, users can identify potential warning signs or determine whether the project has potential, and they can also monitor whether the project adheres to its initial plans and goals.

The public release of whitepapers makes critical project information fair and transparent, benefiting all parties involved. Investors can make wiser investment decisions by reading whitepapers, and developers can decide whether to participate in a particular protocol based on the information provided. For those interested in the project's philosophy, reading the whitepaper can lead to more confident decisions about joining a specific community.