What's in a whitepaper? A detailed analysis of what whitepapers mean for cryptocurrencies.

Hello folks!

I recently saw a thread on Reddit asking about what makes a good whitepaper. In this post, we'll go into detail about this very idea, as well as red flags you can find in whitepapers.

A lot of people focus on whitepapers as an aspect of a cryptocurrency, and for good reason. It's the document that describes in a few short pages what that thing does. But often, a whitepaper can tell you more than you'd learn just by reading the words on the page.

THE GOOD

Let's start with an example everyone knows about. The original Bitcoin whitepaper. It's short - just nine pages - but wonderfully well-written.

It's almost minimalistic, in that it gets the point across without anything more than necessary. This is important, and in fact, it's one of the signs of a great whitepaper.

Another whitepaper that I love is that of IOTA.

Unlike Bitcoin's, it's highly elaborate, jam-packed with advanced mathematics and cryptography. In this way, it goes in a vastly different direction than the Bitcoin whitepaper, but it is also a great sign for the cryptocurrency itself. This whitepaper was not designed to market the coin. It was designed to describe everything the currency can do. My favorite part of the whitepaper has to be the deeply detailed "Attacks" section, which describes several possible attacks against the network, and how they are countered. This is a CRUCIAL part of any whitepaper, and IOTA does it beautifully.

Next up is RaiBlocks.

In general, this whitepaper is similar to IOTA's - an in-depth discussion of the features of the currency. Again, the "Attacks" section, which describes six possible attacks, is highly informative. There's no fluff and no marketing, just a detailed and technical analysis of what the cryptocurrency can do.

What about the Ethereum whitepaper? Vitalik Buterin was 19 when he wrote it, and yet it's a masterpiece.

It's crude - only one step up from ASCII - but as soon as you read the "Examples of what contracts can do" section, that's the moment of "holy crap, this is powerful."

And again, it's a whitepaper with no marketing.

Finally, take a look at the CryptoNote whitepaper. It was written by "Nicolas van Saberhagen", who wanted to create the first private cryptocurrency. He was also a scammer, who premined 84% of Bytecoin... but at least he was good at writing papers.

Again, that first impression is very important. It looks academic!

This one is highly technical - as a whitepaper should be! - but it leans more towards the minimalism of the original Bitcoin paper. The general tone of the paper is "how do we fix Bitcoin?", which I find truly intruiging. The protocol that this paper introduced eventually grew into Monero, whose Monero Research Lab has also written six excellent papers.

A great way to summarize it is like this: if someone skilled could recreate the technology from scratch, with just the whitepaper, it's probably a great whitepaper.

Next...

THE BAD

Let me first say that I do not have any financial reason to attack these cryptocurrencies. But by analyzing their whitepapers at a basic level, you'll start to see why they might be sketchy.

First, let's look at Verge's whit-err... blackpaper. Why is it called that? I don't know.

But the fact that they chose not to call it a whitepaper worries me in itself. The first page looks like a marketing graphic, declaring "Verge: The most privacy focused cryptocurrency." The rest of the pages each have the Verge logo watermarked on them, which makes it seem like a marketing document. There's only one mathematical formula in the entire whitepaper, and it contains an entire section describing Electrum, which is a wallet that wasn't even originally designed for Verge! Lastly, the highly important "Attacks" section just isn't there - again, for marketing. Why would you talk about potential attacks if your goal is to market your coin, rather than advance the technology of cryptocurrency?

Basically, the Verge 'blackpaper' isn't technical, and it fails to show any true innovation by the currency. In effect, it's a PowerPoint presentation slapped onto a PDF. This should worry you.

Next, NavCoin.

Again, it looks good. This is a recurring theme with whitepapers of coins like this: it's a marketing piece.
But take a deeper look and you'll find a few worrying things:

• Not a single mathematical formula in the entire paper.

• No references.

• It makes unverifiable statements, such as:

The security protocols we employ are impossible to circumvent, and the system is
unable to send anything other than legitimate transactions.

No one can guarantee that your security protocols are completely secure. That would be ludicrous.

The all-important "Risks" section is a mere 90 words. Again, this is a project focused on marketing, rather than technology.

And finally, there are no references. You should see any whitepaper with no references as an immediate red flag.

Let's get to the conclusion of this.

You can learn a lot about a project just by looking at the whitepaper.

In summary, a good whitepaper:

• gets the point across

• does not market

• is highly academic

• describes attacks against the cryptocurrency, and how they are countered

• describes the mathematics and cryptography adequately and technically

And a bad whitepaper:

• looks like a PowerPoint presentation

• doesn't describe the mathematics

• lacks references

• tries to cover for a lack of innovation.

I hope you've learned something from reading this, and I'd love to hear your opinion, whether you agree with me or not.

-KOP2