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What To Look Out For In Crypto Projects’ White Paper

It is very important to understand the crypto project’s white paper before venturing into crypto investments. Many of the crypto assets that have been created have white papers which tell a lot about the token or coin.

Bitcoin’s white paper which was published by its creator, Satoshi Nakamoto has been the basis for several other cryptocurrencies created after it.

The knowledge of a crypto asset is provided through its white paper which helps an investor to know what they are dealing with. In this post, we’ll understand more about the cryptocurrency project’s white paper.

What Is a White Paper?

A white paper is a document released by a crypto project that gives investors technical information about its concept, and a roadmap for how it plans to grow and succeed.

It explains the purpose and technology behind a crypto project such as Bitcoin, Ethereum, Binance Coin, etc. White papers usually provide statistics, diagrams and facts to convince interested investors to purchase the cryptocurrency.

When a crypto asset has a white paper, it is considered to be legitimate and professional. This helps investors understand how a business is different from rivals in the space.

This type of paper is different from lite papers, which tend to be shorter, less technical and easier to understand.

Major Crypto Projects’ White Paper You Need To Know

One of the most famous cryptocurrency white papers is Bitcoin. Other crypto assets such as Ethereum also have their own white paper. They are discussed below;

Bitcoin Whitepaper

The Bitcoin white paper was published by Satoshi Nakamoto and titled ‘A peer-to-peer electronic cash system’. In the 9 pages white paper, Bitcoin was proposed as a peer-to-peer system for payments across an online network. It is also proposed as removing third parties and replacing them with verification (decentralization).

The paper stated that transactions would be irreversible. It also added that it is a P2P distributed timestamp server. This is said to generate mathematical proof of an order of different transactions.

The combination of blockchain, cryptocurrency and proof of work resulted in the largest cryptocurrency that is still dominating the cryptocurrency market today.

Ethereum Whitepaper

The advent of Bitcoin led to the creation of other coins like Ethereum. This introductory paper was originally published in 2013 by Vitalik Buterin, the founder of Ethereum, before the project’s launch in 2015.

Bitcoin was specifically constructed to administer a specific use of blockchain technology, Ethereum was created to provide a framework to run all decentralized applications. This was explained in its 36 pages whitepaper. This is explained in brief below.

1. New transactions are sent to the nodes within the network
2. Nodes compile and store these transactions within a block
3. Each nodes works to solve an energy and computing intensive Proof-of-Work (PoW)
4. The node that first finds a solution broadcasts it to the rest of the network
5. Nodes accept the solution if it is valid
6. Nodes show acceptance by beginning to work on the following block

While Bitcoin works with the proof-of-work, Ethereum functions with the proof-of-stake . These two crypto assets have influenced several other coins in their white papers.

Conclusion

It is very important to understand cryptocurrency very well before putting your money into it. The knowledge of each project’s white paper is necessary in order to know what you’re dealing with. The white paper tells you more about the project than a veteran in the industry would tell.

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