Coming up with an innovative blockchain project is just a tip of the ice bag when it comes to pulling through a successful project. You have to find a way of explaining the blockchain project to your potential investors and the whitepaper is your best shot in doing so.
What is a whitepaper?
Before going any further, let’s first look at what a whitepaper is.
A whitepaper is a document that gives a detailed architecture of your blockchain project, elaborating on the problem that your blockchain project intends to tackle, the proposed solution for the problem, and giving a detailed description of the products or services that the blockchain project will be offering. It can be closely paralleled to the business plan of your blockchain project.
The whitepaper is intended to help investors study your blockchain project in detail so that they can decide whether to invest in it or not. Therefore, it has to give investors enough reason as to why they should invest in the project.
Functions of a whitepaper
Let us elaborate more on the specific functions of the whitepaper so that you can hit each of them while coming up with your project’s whitepaper.
- Introducing the idea or concept
Any investor looking at your whitepaper will be looking to find out what your blockchain project intends to accomplish. Therefore, you should ensure that you let them have a clear picture of the problem you have identified and your solution to the problem. This should be done at the earliest point possible to capture the attention of the reader.
The best blockchain projects are those that address the challenges that the larger society faces while going about his day to day activities.
- Explaining this new idea or solution in details
The whitepaper should then take the reader/investor the extra mile of understanding how your idea should work. You have to breakdown the entire project into a simple form for investors to understand how it will function.
Here you have to strike a balance between getting too technical and putting things in the lay man’s language. Technicality shows some sense of sophistication but if you get too technical, you risk losing the attention of the investor, who is most likely than not just a layman looking for a chance to invest in the best investment opportunity that comes his/her way.
- Justifying your idea/concept, token and team
You are probably not the only person that has tried tackling the same problem you identified. Therefore, you have to carry out extensive research into any other existing projects related to the problem you are solving and show your reader/investor what your projects bring to the table.
You have to give him a reason to invest in your project and not in your competitors’ projects. Therefore, you have to identify what you intend to do different and how that is an advantage compared to the rest of the solutions.
When justifying your blockchain project, you also have to justify the benefits of your token/coin to those who will invest in your project. After all, the only way investors will invest into your project is by purchasing the project’s tokens/coins either through an Initial Coin Offering (ICO), Initial Exchange Offering (IEO) or Security Token Offering (STO). Therefore, you have to clearly explain your token/coin and also classify it accordingly; shall it be a utility or security token).
Another thing that the whitepaper should justify is why the team behind the project is the best. Remember, investors are looking at investing in a project that has the prospects of going all the way through to become a success. Therefore, they will have to scrutinize your team to see if they are capable of seeing the project through. A strong team will instil confidence in the hearts of investors to invest.
Questions that the whitepaper should address
To have a good whitepaper, you should ensure that it answers the following questions:
- What prompted you to come up with the idea?
- How will blockchain technology be incorporated into your idea?
- What is the market analysis?
- Who are your competitors?
- What is the growth potential of your project?
- How does your product work?
- What are the technologies used in your project?
- What is the commercial application of your project?
- What kind of token do you intend to use? What platform shall it be based on?
- How do you intend to raise funds? Do you intend to use an ICO, IEO or STO?
- What are the conditions if any for investors to invest?
- What has already been done on the project and what is the approximate time required to accomplish the rest?
- How do you intend to use the funds raised through the crowdfunding?
- Are there any bounty campaigns?
- Who are in your development team?
Steps to writing a good blockchain whitepaper
To answer the above questions, you could follow the following steps:
- Identify your primary target
Before embarking on drafting or writing the whitepaper, you should first consult with the development team to identify the target of your blockchain project.
Some of the questions that you should seek to answer include:
- Is it just the ordinary person?
- Is it a professional e.g. a professional cryptocurrency investor?
- Is it a blockchain developer who would use your solution to develop other networks?
- Is it an executive in a business who might influence his/her company to buy your blockchain technology?
Once you identify the target group, you should go ahead and create a detailed profile about them. the profile should point out the following:
- Location (country, state, province or continent)
- Education level (to understand the language, either formal or informal, that you shall adopt in explaining your blockchain project)
With the above details, it will be easy for you to understand how best to explain your concept. If for example, you are dealing with a target audience who are experts in cryptocurrencies, the use of technical terms won’t hurt. However, if your target is the ordinary man, you will have to use a simple to understand language.
Also, since your blockchain project is something that you would want to be adopted around the world by people with different languages and cultures, you will have to do white paper localization.
Localizing the whitepaper means translating the original version of the whitepaper into different versions fit for the various parts around the world. It might include translating into various languages. The translation should go beyond the linguistics; it should include analogies, norms and examples that are local to the demographic localities you are translating for.
- Identify the goals that you want to achieve with the whitepaper
Your goals should be specific, measurable, achievable, relevant, and time-bound (SMART). An example of the goals include:
i. Raising funds
Most blockchain whitepapers are intended to make investors gain confidence in the blockchain project to a point of purchasing the tokens offered wither in a Security Token Offering (STO), Initial Exchange Offering (IEO) or Initial Coin Offering (ICO). This way, the project developers can raise capital for the project.
If your whitepaper is intended for this goal, you should put in mind that at the end of reading the whitepaper, you want the investor to cash in on the project. Therefore, you have to include the projects potential to grow and how the investor shall make money out of the project. Every investor wants to invest in something that will bring returns and if possible in the near future.
You have to indicate how much you want to raise and by what date. You should also clearly indicate how those funds will be distributed into your project so that the investors can make informed decisions.
You should also include a clear roadmap indicating the various milestone. The roadmap should have realistic timeframes. Remember, if you fail to hit the milestones by the anticipated timelines, your investors will start losing faith in you and probably even want to opt-out.
ii. Awareness creation
In any case, the whitepaper plays a great role in informing people/readers that there is a blockchain project that is about to be launched.
In some cases, this could be the sole goal, without the need to raise funds. An example of such a whitepaper is the Lightning Network Whitepaper whose main objective was to introduce a new scaling method for the blockchain network. After its launch, various blockchain networks among them, Bitcoin and Litecoin adopted the scaling method while others like ZCash and Ethereum were inspired by the technology to develop their versions of the solution.
iii. Selling services and products
If your whitepapers goal is to sell a product or service, you should first identify and describe the problem that your audience has and then list the benefits of the solutions (products or services) that you are offering.
Such whitepapers are subjective. However, you should restrain from making in overly promotional.
An example of such a whitepaper is the Sirin Labs Whitepaper that was written to describe how its blockchain-enabled smartphone, Solarin, works and how its users were to benefit.
- Make a draft of the whitepaper
Your project’s development team (especially the designer, developer and engineer) should be actively involved in making the draft since it should give the main points that should be included in the whitepaper.
The team that creates the first draft should be keen to provide the necessary information on the:
i. Problem statement
ii. Market description
iii. Product description (how is shall solve the problem)
iv. Tokenomics (Token Economics)
v. Fund distribution
vi. The team
vii. The roadmap
- Come up with a structure for the whitepaper
Before delving into writing the final copy of your whitepaper, it is important to come up with the structure. The right structure emphasizes the right points at the right juncture.
There are three most commonly used structures when it comes to writing whitepapers:
- The Before (current world with the problem) — After (World without the problem) –Bridge (Your solution as the one eradicating the problem) structure
- The Problem (identify and explain the problem) — Agitate (show the ugliest part of the problem) –Solve (introduce your solution to the problem) structure
- The Features (Describe the features of your solution) — Advantages (outline what makes your solution to stand out) — Benefits (describe how the users shall benefit from using your solution) structure
The first structure is best for explaining a solution that is completely new in the market. The second structure is best for writing a whitepaper that is intended for marketing purpose. The third structure should be used if the problem you are tackling is obvious to the target audience and there are very many solutions out there.
- Hire an expert to write the final copy of the whitepaper
Since the members of the development team may be too busy on the project and lack time to write the whitepaper, it is advisable to hire an expert writer to write the final copy. The writer should be experienced in writing blockchain-related material; meaning he/she should have some knowledge of blockchain technology so that he/she can explain some technical issues well.
As the writer writes the whitepaper, the writing should be closely monitored by someone on the development team. The writer should be able to freely interact with the team to get assistance with concepts and things when the need arises.
If the writer is someone from the outside, the team should understand that the writer is too green on the project and shall require explanation on many things so that he/she can understand the concept and objective of the project. That way the writer shall be able to relay the information better on the whitepaper.
You can hire a freelance writer from one of the online working platforms or get a referral from your colleagues for the writing task.
What to include in your whitepaper
Let’s now look at what your whitepaper should look like. We shall first give a general template and then get to explain what should be included in each section of the template.
You could use the following template when writing your whitepaper. It has all the necessary sections that a good blockchain whitepaper should have.
The above headings should cater for everything that a good whitepaper should have.
Now let’s get into explaining what should go to each section.
This introduces your blockchain project to the reader. It should be a summary of the entire project and it should be presented in a compelling manner that leaves the reader in thirst of knowing more about the project.
You could choose to use an executive summary or introduction as the title of this section.
In some cases, the summary is written as a letter from the CEO addressing future token holders or investors.
In this section, you should place any legal notice or disclaimer about your project or the ICO, IEO or STO you intend to issue. The disclaimer or legal notice should contain information on any restrictions or notifications.
This is the section where you should explain any exceptions of countries if any. For instance, it would be an exception of residents from certain countries from buying the tokens. This could save you a great deal in future since you may not have registered with the regulatory authorities from those countries. It could save you from issues like the ones we witnessed with Telegram where investors from the USA bought the tokens without Telegram following the rules outlined by SEC for issuing ICO tokens to US citizens.
Table of content
The table of content gives a clear outline of all the heading and subheadings used throughout the whitepaper.
You could also include a table of the graphics that you have used.
These help the reader in navigating within the whitepaper, which is normally a large document.
In this section, you should outline the problem that your blockchain projects seek to solve. You may delve into why it is important to solve the problem or explain its effects on society.
You could also explain the consequences of not solving it.
You should capture the readers’ attention and give him/her enough reasons as to why they should read the document and even give an overview of what they expect to come across.
You could use graphics, photos or charts to expound more on the problem and its effects.
This section is especially important for ICO, STO or IEO whitepapers. Investors would like to see how your project shall perform in the market.
You should, therefore, explain to the investors where your project fits in the market. Though numbers are sometimes convincing, if you choose to include them, they must be backed by facts, research or analysis.
You should give a clear picture to investors of how your project shall be adopted and its growth projection.
Product description (how it shall solve the problem)
This is the key part of the whitepaper. You should start by explaining the technology behind your solution. How it is unique from any of the currently available solutions if any.
Secondly, you should explain how the users shall benefit from the project.
You should use diagrams, graphics and photos to explain hard concepts so that the investors can get a clear picture.
Tokenomics (Token Economics)
Since your solution is blockchain-based, you have to explain the token that you intend to use for your project. You should clearly state the type of token it is; is it a utility or security token? Is it an ERC-20 token?
This is the section where you also state how and when you intend to distribute the tokens. You should state the date when the token issuance shall start and state the price of each token.
If possible, you should draw a graph showing what percentage will go to who.
In this section, you should outline how you intend to use the raised funds. Investors need to know where their money is going. They also need to see how much is needed to accomplish certain tasks.
It is not a must for you to go into the details of the expenditures. Just group them generally. Like product development, marketing, team and so forth. However, it is important to allocate more funds for product development. You should avoid using terms like miscellaneous.
This is an integral part of any blockchain project. Besides the whitepaper, you should also indicate the team on your project’s website.
You ought to include photos and short biographies of all the members of your team. You should also include their contacts. The biographies help in instilling confidence to investors that the team behind the project is qualified and that they shall deliver. The contacts make it easy for investors to verify that the team members are real and not just a scam.
It is also important to state any past projects or positions that the team members have held in other institutions or projects.
A good number of investors will invest in your project because they are confident in the development team. That is why it is important to use qualified individuals for various positions.
In this section, you should include a detailed development roadmap of your project. The roadmap should clearly outline the milestones of the project while clearly outlining the timelines.
The roadmap should be for the next 12 to 24 months.
If some milestones are already accomplished, it is important to state that too. That will go a long way in convincing the investors that the team is serious about the project. Majority of investors will only cash in on projects that already have something to show. Nobody wants to invest in something that only appears on paper with no hopes of it ever starting; some have turned out to be mere scams!
The roadmap should also state when investors can start getting returns from their investments. This could include things like when the token shall be listed on crypto exchanges for trading.
You could have a graphic of the roadmap and also explain each of the milestones outlines on the graphic.
In this section, you should list any company that you have partnered with. Also, you should list any venture capitals that may have invested with you already.
Partnerships go a long way in promoting your blockchain project since they show that companies are confident that your project shall become a success.