What is a whitepaper- blockchain basics
Recently in past months since posting on this platform I have received a lot of interest and questions about the crypto basics. It is much easier to understand all these different aspects to blockchains once you have learned the basics so to speak. It is very easy when you have been invested in the blockchain world for so long to forget that some of the basics are not common knowledge. One of the most common questions I am asked is around whitepapers and what they are? So hopefully some of the information below will help you gain a better understanding.
A whitepaper is nothing more than a formal declaration of a crypto project's goals. Think of it as the road map for a project. The whitepaper is usually a fairly lengthy document that will contain the goals of the project, the timeline for achieving those goals, and some of the strategies that will be used to implement those goals. It will also normally include the "tokenomics" and describe how the project will bring value to investors. Lastly, the whitepaper will give a bit of info on the founding team and the value proposition of the project. In other words, the whitepaper is a document that provides a general overview of the project.
The first 'crypto whitepaper' was released by Shitoshi Nakamoto in October 2008 and was called:
Bitcoin - A peer to peer cashless system. This can be seen in the below link if you fancy a quick look. It was written as the initial formal document surrounding how the bitcoin project would work and its plans for the future.
In 2008 and still today, most financial systems were based upon 3rd party financial system, the diagram below shows the premise of what i mean:
Bitcoin, set out to replace this system with a peer to peer method which can be better understood in the whitepaper which I have put a link to above. This would mean that we would could provided a trusted system which could safely transfer money from one person to another. Bitcoin is based upon a proof of work blockchain which I have explained in previous articles for your information. The bitcoin whitepaper was the first crypto whitepaper so to speak, and from this we have now in 2021 seen a huge amount of crypto whitepapers, some more sound than others in my opinion.
Whitepapers are often created by the team behind the crypto project to let investors know their future plans, tokenomics and usually a roadmap. These all vary depending on the project so it is key when looking at crypto blockchains we do our research. From an environmental standpoint these whitepapers can be used to demonstrate environmental commitments of the associated crypto project, which in turn could be more of a reason for investors to use their token or onboard their blockchain project. Some crypto projects tokenomics will work completely different to anothers, however this may be for a specified reson. Ie, POW blockchains are more secure than POS, so for security reasons the project may need to be secure = POW, however if the project entailed documents or items that did not need to be as secure, then a POS system would be faster and less energy intensive and would be better for the environment and its users.
In the future we will see a lot of green washing through these crypto platforms, we have already seen it over the past year, especially with NFT projects seeking to be carbon friendly and give back to the environment in someway. It will be the same with different crypto currencies, claiming they are the most efficient and best for the environment. In the end there is not a one fit all solution and blockchains need to be tailor made to the specific principles of what the blockchain is trying to achieve. Whitepapers are good ways to gain understanding on a crypto project and truly research for yourself whether or not the tokenomics are environmentally friendly for yourself and I urge you to do so. It is up to all of us as investors in these projects to ensure that we are supporting the right teams behind these crypto projects moving forward into our future. I myself am still looking for the perfect environmentally sound project for some of my working needs........Maybe in the future I will be able to point people in the direction of specific blockchains for specific uses that are environmentally sound, but at present the industry is still so new and still developing adoption.
Again I urge all of you who are new to the blockchain world, make sure you read these whitepapers and research the teams behind them. Over time these documents will become less intimidating. Also be aware that these are proposals and that sometimes people lie to steal your money :)