Understanding Whitepaper || 10% payout to tron-fan-club.

Introduction

Having a profound knowledge of a project before investing in it is key. When you don't know what a project stands for or what it wants to offers then you're already at a very disadvantageous position which could be very detrimental. In today's write up,we will be looking at a concept called Whitepaper which can give us a clear picture of what a project stands for or represent.

What is a whitepaper?

A Whitepaper can be defined as a document usually prepared by developers explaining the purpose and the cryptocurrency project and the inspiration behind it. It contains a lot of detailed information explained with the aid of formulas, diagram and statistics,all in a bid to convince and attract investors

A white paper is very important when it comes to introducing a new project because without it,the project is deemed unprofessional and fraudulent because it shows you ain't transparent enough. Wise and calculative investors will then avoid projects like this simple because they can predict what will befall in project in time to come.

What to look out for in a white paper.

In this section,I will be discussing what you need to look out for in a white paper or better still how to read read a white paper. I think it's also important that you get yourself already acquainted with certain blockchain terms in order to understand to grasp the information presented in a Whitepaper. Below are some of the things you should check.

• The reason for the project

A very good project should have a reason for it creation or purpose for it existence. This will then give prospective investors foremost insight of the project. Usually a project should be created to solve an existing problem,look out for it and see how it can benefit you as an individual.

• Check out the project’s real-world utility

You have to also check out it's real world utility,most cryptocurrency goes beyond just a coin as some play the role of "governance" while many other function as NFTs which authorizes you as a sole ownership of an asset or a product.

• Check out the project consensus mechanism.

Consensus mechanism is another important thing to look out for. You need to know how a consensus is reached on the network of that project. Example of consensus mechanism that are common includes Proof of work (pow),Proof of stake (POS) Proof of burn etc. If this is lacking then you should avoid the project because you might just be dealing with a centralized project.

• Check out the distribution formualr of the initial coin.

You also need to check this out,knowing how the initial coin was distributed will go a long way in helping you know if the project is worth investing in. Initial coin means coin that were mined before the project was officially launched. If a larger percentage of this coin is apportioned to the developers or certain people in a close circle then it's a red flag already

• Project timeline

This is key,you can track the activities of the project via the project timeline.These activities include project launch period,presale period and other related activities.When this part is ambiguous then you can be sure there is something fishy a bout the project but when it clearly stated you can use it in tracking the progress of the project.

Conclusion

We have leant about Whitepaper and how important it is. I would have loved to mention some other elements to look out for but I think it's also a good idea to DYOR because this is not a financial advisor, it's only a guide made from my findings.I also believe that you get to understand Whitepaper more when you take your time to read the Whitepaper of different project from time to time. You could even spot the pros and cons by doing this.Thanks for you time.

Regards:
@lhorgic♥️