Many would agree that cryptocurrencies are growing in popularity at exponential rate nowadays. Maybe, it makes you want to jump into the bandwagon to see what the buzz is all about. Just before you dive in, it is important to be mindful about its whitepaper. This serves as the foundational document outlining the key elements of the cryptocurrency before and during its release.
Reading the whitepaper may be a little overwhelming, particularly for newbies in the cryptocurrency world. However, the moment you were able to break it down, it becomes simpler to understand.
Outlining the Goals and Vision of the Project
At its core, each project starts with a vision. The whitepaper normally explains the objective of the token from:
- Why it was created
- What’s the problem it’s trying to solve
The paper gives the users insights into the greater mission of the project and how it is trying to make an impact. For instance, there are tokens that are made to streamline financial transactions while others are designed for decentralized applications or by building new blockchain protocol. Needless to say, the clearer the vision, the simpler it is for the users to identify whether the project is aligned with their needs or interests.
What Powers the Token?
In this section, it talks about the technical elements of the project. You are going to find information regarding the blockchain it is operating on, whether it is using Proof of Stake, Proof of Work or any form of mechanism. The paper will explain as well how the token’s technology is used for innovating existing solutions.
If you are not tech savvy, there’s nothing to worry about. There are jargons that you may come along the way but the secret is, to get an idea of how scalable, secure, and efficient the technology is. This will help users to evaluate the trustworthiness and long-term potential of the token.
How the Token Works?
In cryptocurrency world, this is referred to as “tokenomics”, or the token’s economics. Learning about this is essential for anyone who is interested to participate or invest in the crypto project. Whitepaper typically outlines the supply limit of the tokens, how it is distributed, and how it is mined or created.
Not only that, it explains its utility whether it is a governance token, a payment token and so forth. By reading this section, users will be able to understand how the token is operating within its network, how it can be taken advantage of, and its scarcity, which will definitely affect its value.