A key part of the process of investing in a Cryptocurrency is to review the whitepaper. The whitepaper provides provides a range of information on the opportunity, project, problem and solution as well as the experience of the team and their expertise. Jason Cooney, founder of The Tender Team and Tsaks Consulting, provides the following tips and key points to look for when reviewing and reading a Whitepaper for an ICO.
In most whitepaper ICOs they will detail their ‘experienced and expert’ team. It is important that you read and analyse their profiles, and then conduct independent research on each of them. Of course in the document they will dress up their experience and capabilities. However, it’s important to ask the hard questions, such as what academic qualifications have they got? How much experience have they got? Have they got a track record of successfully delivering similar projects?
When reviewing the team, its important to make sure all the bases for successfully running the business are covered. For example. if you have six technical personnel on an expert team, and no marketing, administration and delivery experts, then they may not have all the bases covered to deliver the project. It’s also important to gain an understanding of the team’s relative capacity. If each person is sitting on numerous boards and holds another full-time job, it may be difficult for them to commit the required time to the project.
It’s critical that the whitepaper puts forward a plan and schedule about what they will deliver and within what timeframe. Key milestones for the project need to be outlined, and if you invest, you will want to keep a close eye on if these are achieved or not. When you are assessing the plan, it’s important to take conduct a review of how realistic it is. Are they being over-abmitious in terms of what the are setting out to achieve? Do they have the budget? Are they initial key milestones to easy to achieve and not really milestones as such? These are all important questions as they to go the heart of the investment and the credibility of the investment.
The project needs to solve a real business or society need. It needs to provide a solution to a problem that can be commercialised. That is what you are investing in. Since the boom of Cryptocurrencies, there have been ICOs for coins that do not solve a real world problem or have a strong fundamental business case. This poses a concern because it limits he potential fundamental value (that is not to say that the price will not increase). Therefore, when reviewing the whitepaper, be sure to review in detail what the project actually does, what problem they are solving, how the coin and project will deliver value and ensure that it can be commercialised. If the solution is very technical in nature, dont assume. You need to educate yourself to be able to make a solid judgement about what is being proposed.
The new reality is that Whitepapers can be up to 100 pages long and have a lot of detail. There may be lots of fancy looking graphs and tables and loads of text. The question you need to ask is has it been thoroughly prepared. If there are graphs and tables included do they add any real value or have any meaning? If there are assumptions in the document, have they been made on solid academic research and has that been cited? You will probably find projections in the document and assumptions around those projects. Have these been overinflated? Every sentence of the whitepaper gives you the opportunity to assess if it has been thoroughly and thoughtfully prepared. You also need to assess whether or not it has been well written. The reason for this is that it gives an indication as to the credibility of the whitepaper and the organisation. If they have showed care and diligence in preparing the Whitepaper, thee may be a strong corporate culture (or possibly they have hired a company like TheTenderTeam to write it). Either way its a good indicator.
No doubt the whitepaper will include a budget and a target. The purpose of the ICO is to raise money. Its absolutely critical to review what that money is to be spent on. Therefore, you need to review the budget in detail. Is the budget focused on marketing more than technical development? Does it seem like there is an overallocation for luxury items such as offices and equipment purchase, and not enough focus on development of the product and solution? Is there insufficient detail in the budget on where the money will be spent for you to make a fair assessment? Or is it very vague and therefore up for interpretation?
A lot can be revealed about an ICO and company in a Whitepaper, so read it in detail. Feel free to call The Tender Team or Tsaks Consulting for any Cryptocurrency service or advice.
ELI5 What is a cryptocurrency whitepaper?
Jason Cooney is the founder of The Tender Team and Tsaks Consulting, and is an expert in investment writing including Cryptocurrency Whitepaper development.
Contact Jason at www.thetenderteam.com.au and www.tsaksconsulting.com