How To Analzye Initial Coin Offering (ICO) Whitepapers For Crypto Tokens

For anyone looking to invest in an ICO, one of the first things they look for on the company or startup’s website is the whitepaper, along with roadmap, management team and availability of product. These are the indicators that help investors make a decision on whether to invest or not.

It is important to note ICO whitepapers vastly differ by industry, token or technology. So, you shouldn’t expect all whitepapers to follow the same formats or structure throughout. They can be as different as can be, depending on the industry and goal.

Whitepapers for an established altcoin for instance, will often be different from that of an artificial intelligence project. The most important thing in a whitepaper is the information and direction. If it’s insufficient, then you might want to keep looking for other opportunities.

The good thing is there’s a list of features –outline if you will- that a whitepaper will have regardless of its industry or project type. They may not exactly follow the same sequence as we’re about to list here, but they’ll pretty much have all or some of the attributes we’ll show you shortly.

Now, if the concept of a whitepaper is foreign to you, and you need more explanations, think of it in terms of thoroughly comprehensive document released by a company providing thorough and critical information about a project, token or coin.

A well written whitepaper often contains everything from the mundane to the most complex, spelled out and written in a way that potential investors would be able to understand everything.

Naturally, the aim is to logically sway the potential investor and convince him/her of the validity and feasibility of their project, product or token.

Of course, you won’t find the shameless shilling of coins and tokens in the whitepaper, but they are designed to eliminate objections and answer possible questions you might have before they pop in your head.

Every decent whitepaper has the following features:

  • Statement of problem
  • Solution for that problem
  • A clear proposal detailing the process of problem solving
  • Token use case
  • Case for the project or token’s viability
  • Extra details critical to project conclusion

The Necessity Of An ICO Whitepaper

No matter how incredible your solution or project is, convincing the investor is critical to your ICO’s success. An ICO’s whitepaper goes a long way in accomplishing this by providing the investor with all the necessary information they’ll need.

This is why your whitepaper has to be in-depth and detailed. Most startups or companies tend to worry about giving too much information. Don’t worry about that. Excess information is always better than thin information.

A 100-page whitepaper that answers all possible questions is always better than a 20-page one that barely scratches the surface of satisfying investors. Interestingly, smart and serious investors typically take companies with a more comprehensive whitepaper seriously than those without.

They often figure that companies willing to distil the necessary information into a document thoroughly, are serious about doing business, achieving their goals, and more importantly, making them money.

A clear, comprehensive whitepaper with realistic timelines and outcomes communicates to potential investors that the company is legit, as against the hundreds of other scam ICOs.

What To Expect In An ICO Whitepaper

All whitepapers tend to have all or most of the following features and categories:

  • Table of Contents –outlines the titles of sections, their pages and headings.
  • Abstract –a concise summary of the problems the token intends to solve, and the possible solution. This is often brief.
  • Industry Overview –may or may not be included, this adds more validity to the token, often outlining critical information that will help the investor understand the need for the project.
  • The Problem Statement –insight into the current problems faced in the industry and how they are reducing efficiency, results, productivity as well as impacting revenue negatively. Might include information on current ineffective solutions and outline their limitations.
  • Solution –company outlines how its product or service provides a unique solution that’s better than standard industry solutions and how it will help businesses solve the problems.
  • Legal Disclaimer –all ICOs will issue disclaimers warning investors of the possible risks or rewards of investing in their token as well as information on the limits of the rights both the company and investors. Information that clearly differentiates tokens from securities may be outlined here too, as well as investor eligibility. Depending on the project, this part may be brief or exhaustive.
  • Possible Project Competition –not all ICO whitepapers will have this, but some do. This section often includes current ICOs or projects in the same industry that are attempting to solve the same problem as they are as well as information on how the founders intend to outdo the competition.
  • Business Model –outlines founders’ realistic strategies, information, tactics, platform and long term goals. You’ll also find information on fulfilment, execution and sales strategies here.
  • Token Distribution –includes information on the number of tokens available, distribution percentage, possible airdrops and private sales. This is very useful in swaying investors to invest in the project.
  • Breakdown of the ICO –includes information on the various stages of the ICO. Some ICOs tend to have a private sale, pre-sale and public sale events, while others don’t. This depends on the founders’ inclinations and discretion.
  • ICO’s Roadmap –this indicates the ICO’s projected execution dates, milestones, timelines and deployment. It’s meant to convince the investor of the team’s ability to deliver within set deadlines. This often includes dates for everything from token sales, various testing stages, launches, availability to investors and final deployment.
  • Team Information –this is crucial as you want to make sure that the team knows what it’s doing, has the required experience and pedigree, and the necessary capabilities to see the project to completion. The more experienced and savvy a team is, the more investor confidence it engenders.
  • Sources –for reference and confirmation of claims made by the founders or team working on the project. Resources here are usually verifiable, and its inclusion in the document, designed to further convince the investor of the validity and possibility of the project.

Analzying Initial Coin Offering (ICO) Whitepapers Conclusion

These are the most common things you’ll find in ICO whitepapers. Of course, some can include extra information like token sale agreements, light paper, one page document and a technical paper. But that’s not really necessary. Those are included at the behest of the founders who consider it part of their due diligence.

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