When assessing which cryptocurrency to invest in, you will more than likely review the whitepaper. The whitepaper for an ICO provides details of the project, the problem and solution that is being solved, and the team being put forward. Here is a guide, developed by Jason Cooney from The Tender Team and Tsaks Consulting, on how to review a white paper with a fine tooth comb and what to look for:
The team
Anybody and everybody can put a team of ‘experts’ together. But you should really look into the history of the team being put forward. You will want to know for each team member:
- If they are academics, what universities are they based in and are they leaders in their field?
- Do they have a track record of delivering on major projects?
- Are they members of any industry associations?
- What previous positions have they held relevant to the project for other reputed organisations?
- In what capacity will they be contributing to the project and are they suitable qualified to make that contribution?
The budget
You will want to know that your money will be used sensibly. So make sure that the budget reflects the project and solution being developed. For example, if 15% of the budget is allocated to ‘marketing the project’ this will warrant further investigation. The money you invest you will want focused on developing the solution, as opposed to being used to raise further capital.
The wages being paid to members of the team also need to be scrutinized to ensure they are fair and reasonable. There should be clear milestones put in place for what is going to be achieved with certain amounts of capital. Be sure to review these and make sure they are also fair and reasonable.
Does the project have a legitimate business case?
This is a difficult one. If the technology solution is highly technical, then you may need to have a subject matter expert review it for you and provide advice. First of all you want to know if the whitepaper is similar to any other technology. If it is, then what makes it different. If there is no unique point of difference then what is the motivation for investing?
You also need to do a practical check to ensure that a real world problem is being solved and that the project is scaleable and achievable. There is no point (other than speculation) in investing in a product that doesn’t solve a current or future real world problem or that doesn’t have a legitimate use case. When you read the problem, solution and project components of the whitepaper, keep a practical mindset. Think from a real world business perspective about if you think the project is credible and will succeed. Think about how the experience of the team will align and think about if it has a strong fundamental business case.
The Tender Team and Tsaks Consulting provide whitepaper and ICO consultancy globally through our specialist Cryptocurrency division now headed by Jason Cooney.
