Hello everyone!
I hope everyone had a merry Christmas yesterday. A few days ago I posted an outline of the SALT white paper and began working on a few other outlines. If you'd like to read that post here is the link: https://steemit.com/cryptocurrency/@peetrius/outline-of-salt-s-white-paper-and-due-diligence
These outlines take time to organize, so while that work is in progress, I wanted to write about something I've noticed there's a definite way to tell the difference between a well and poorly written white paper. While this is not a one size fits all guideline for all white papers, it's a good sanity test for researching ICOs and new players into crypto. For this discussion, I'll be using SALT as the case of a sound white paper and Tutor Ninja Token (NTOK) as the case for a bad white paper. If you'd like to take a quick glance at both of these the links are https://membership.saltlending.com/files/abstract.pdf and https://ntok.io/NTOK%20White%20Paper.pdf
1. The Design of the White Paper
The quickest way to judge a white paper is literally by the cover (well, the design). Aside from the first page and graphics tables, white papers aren't supposed to be sexy and bursting with color and creativity. They're meant to be technical, specific, and bland. A rule of thumb that I use is if I can print out the white paper without using up all my ink (I much prefer taking notes on a hard copy). Using SALT's white paper as an example, notice how conventional it is. Except for its cover and the occasional table or concept UI, it is all text. The footer allows for creativity without getting in the way of the main purpose of the white paper: the content. Now take a look at NTOK's white paper. Half the pages involve white text on a colored background and focus on a show, don't tell document. While that might be good for storytelling, it has no place in white papers.
2. Organization of the White Paper
A well organized white paper is essential for getting a detailed message across to a mass amount of people. This concept should be common sense so I won't add anything more than this. SALT's white paper has a definite flow and well sectioned so that readers can follow the information. It goes from the abstract to the vision, the product, ICO details, and any final aspects of the product that the authors felt needed more description. Compare this to NTOK's white paper where sections are disjointed and repetitive. There's no natural flow of information, and some parts and phrases are copy and pasted throughout.
3. Specifics of the White Paper
It goes without saying that a white paper must be as detailed as possible when it comes to the specifics of the platform. Any form of vagueness should be red flags to prospective adopters. A white paper is a go-to resource for any crypto project, and the care developers that developers have can be seen in the details within. SALT does this well; there's a definite example as to how their smart contract will function, use cases, descriptions of membership tiers, possible roadblocks to expansion, and overall leaves very little to be questioned about the potential of the project. The NTOK white paper leaves much to be desired in this area. As stated earlier the design is a flaw that doesn't leave room for specific descriptions. There's not much written as to how the smart contract will function on the Ethereum platform. If one must ask "What benefits does the ERC-20 token have over a market specific cryptocurrency?" then be wary of the token. SALT's white paper gives a detailed example of how their token's smart contract follows market prices, sends maintenance calls, and liquidates assets if necessary. These types of specifics lack in NTOK's white paper.
4. Details of the ICO
While similar to the previous section, the ICO is such an essential aspect of any crypto-project that it's deserving of its own part. If there's any vagueness in how the ICO is organized during the presale, the ICO itself, and onward, then one should give serious thought as to whether this is a legitimate project. The figures that are must be listed are the total number of coins outstanding, the breakdown of coins available for sale/mined and coins set aside for the development team, if there is a pre-mine, and details as to how and why the figures are what they are. New companies setting aside capital for founding members is not unusual, but one should take note if the numbers show they're trying to pay for necessities or lining their wallets. SALT's white paper gives clear descriptions of how many coins are available for sale, how many coins the development team will hold, and what the price of SALT will be after the discounted sale. NTOK's white paper, however, doesn't even list how many total coins are minted. There are figures of how many will be available to the public and how the proceeds of the sale will be utilized, no numbers on the total coins outstanding is a huge red flag for anyone looking to be an early adopter of the coin.
I could list more, but these are the four most significant concepts to look out for when reading over a white paper and examining a project's merits. In the end, one should always go with their gut when it comes to evaluating these new projects. If something feels off, it's best to leave your money with white papers you know are sound rather than flaky.