Updated: May 3, 2019
The foundation of a blockchain application is not its code or anything technical for that matter.
It all starts with the whitepaper.
By now, you’ve most likely heard quite a bit about the whitepapers of certain ICOs - the bitcoin paper being one of them - and how they were instrumental in launching the biggest cryptocurrencies.
However, these blueprints demonstrate the underpinnings of far more blockchain applications than just cryptocurrency. If you hope to launch your own blockchain network one day, it’s essential for you to know the ins and outs of writing a whitepaper.
Defining the Whitepaper
For those of you with business backgrounds, whitepapers aren’t new to you. For the technical folks out there, you know that the whitepaper is a blockchain must-have, but you might not be 100% sure what goes in it.
Let’s bridge the gap.
As a recap, a whitepaper is an authoritative report or guide that gives information or proposals on an issue or topic. In the context of a blockchain application, a whitepaper would offer a solution to a problem (proposal) and then describe how the platform would work to achieve its purpose (information). That’s why we refer to it as a blueprint and why it precedes the code.
Of course, the whitepaper isn’t the end-all, be-all component of a blockchain application. Think of the whitepaper like an architectural blueprint for a building. The blueprint provides details for how the building will be constructed. However, it’s not a building yet.
For it to become one, there needs to be a construction crew who can build the structure, brick by brick, floor by floor. Likewise, the whitepaper merely details the purpose and functionality of the blockchain application. It still requires a multi-faceted team of creatively, technically and strategically-inclined people to build a functional blockchain product.
It’s important to remember this fact because many investors have unfortunately succumbed to ICO scams that lured people in simply because they had a convincing whitepaper. Therefore, it’s crucial to focus more on the development of a tangible blockchain product, as opposed to just buying into the words written in a whitepaper.
What the Whitepaper Must Accomplish
This document is not meant to read as a literary work of art - it’s no prize-winning novel or acclaimed poetry anthology. Ultimately, it should serve as a means to create credible awareness of the solution being proposed. When investors or collaborators read the whitepaper, they should get a sense for what the compelling market need and business value of the solution are, as well as what the product can do to address this. It should help them decide whether they want to join the project. With that said, it should contain the following characteristics.
Winning With a Whitepaper
It Must Be Credible and Authoritative - If you believe in your solution, that conviction has to come across in the whitepaper. That means you need present objectives, goals, statistics and processes which clearly demonstrate how your application can resolve a pressing issue. A genuine critical assessment of market needs and the business value it provides must be presented. All too often projects have been led by technology alone and while technology is important, the project must be solving a need and providing value to users.
It Must Be All-Encompassing - A well-written whitepaper must educate, market, inform and persuade investors and collaborators. We’ll identify how to accomplish this shortly.
It Must Be Formal - A whitepaper is very much a technical document and should read like an academic journal but one that demonstrates business application. Yes, it’s contrarian to the more simplified writing styles championed by many publications these days, but you’re speaking to a narrow group of people with highly specialized knowledge. So your whitepaper needs to speak their language.
If your whitepaper meets these criteria, then it has a much higher chance of attracting investors, collaborators and other parties who may see value in your application.
Contents of the Blockchain Whitepaper
Understandably, writing a whitepaper may seem like an overwhelming task. It’s easy to think that you have to sit at your desk for weeks, months or even years, typing away until you have a “bible” sitting on your nightstand. But this isn’t the case. You and your team can prepare a whitepaper in a relatively short span of time, providing you have the right outline or direction.
Start With an Abstract
Essentially, your abstract is a summary of your blockchain application. In that summary, you will mention things such as the meaning behind its name, its main purpose (should be a solution to a major business or technical problem for which demand is demonstrated), why you’re launching the application and a snippet of how it works. Think of it as your 60-second pitch but written in one paragraph. You can add an introduction that transitions into what your platform or project does.
Identify the Compelling Drivers and Value Delivered
All too often, projects fail because they are so focused on the technology, they forget to first understand if there is a need for the solution. Understanding the market and demonstrating the challenges with the current way of doing things is an important start. Showing what the market size of this challenge is (addressable market) helps to illustrate the potential for the solution. Value delivered as a result of your solution to the market, businesses and users also needs to be discussed.
Most importantly, a critical assessment of why blockchain technology is needed (can it be done just as well without blockchain?) and your approach to solving the problems are necessary. They also demonstrate that you have done your homework and that your solution has a potential customer base.
Discuss the Project and the Platform
Once you’ve established a summary of what your application is, you can start to break down its nitty-gritty details. This is where you start to dish out technical considerations such as transaction speeds, diagrams of how the application uses the blockchain, calculations, verification systems, and protocols for privacy. All of your project’s functions should be backed up by facts, stats, and research.
But most important of all, you need to discuss costs. Investors need to see how you plan on allocating funds to the project and how you’re currently doing so. It’s also wise to have a developmental roadmap (spanning 1-2 years) to give investors a glimpse of your project’s future potential.
Discuss the Market and Plans for Differentiation
The blockchain and cryptocurrency market has very quickly become saturated and you need to demonstrate your awareness of that. Investors need to see it. Why? They’re approached by plenty of hopefuls looking to launch their own blockchain apps, STOs and more.
Ideally, you’ll discuss the market, referencing common practices and methods seen with other platforms, and show how you can fill in the gaps they miss. Doing this presents your project with unique selling points, separating your application from others and piquing the interest of your investors.
Of course, you should also include information about specific “products” or services that are branded to give investors a sense of how you’ll market your project.
Highlight Your Team
Now, there will be some disputes here. You will see a lot of whitepapers out there that make no mention of their team. In the famous bitcoin paper (as well as others) is a great example of this - after all, no one really knows who Satoshi Nakamoto is.
However, blockchain applications are no longer mysterious entities in the tech world anymore. You’re better off at least mentioning who your key players are because it just makes it easier for investors to get in contact with you.
You don’t have to divulge their full background. Just a few mentions on their role within the team, level of experience and why they’re the right person for the job.
Now, keep in mind that there is no right or wrong way to write a whitepaper. The categories mentioned above are more or less the most common sections written into whitepapers. The whitepapers for some of the most successful blockchain applications deviate from convention. What matters most is that your whitepaper helps investors and collaborators envision what it is your project will accomplish and whether it has benefit, not whether it adheres to a template.
Tips for an (Almost) Flawless Whitepaper
Without some guidance, it’s easy to go off on a tangent and write a whitepaper that fails to communicate your objectives. But there are few pointers to help you avoid this from happening.
Stay On Track
Use an Outline - Writing an outline will help you focus on key points, so you know what to say from start to finish.
Learn From Existing Whitepapers - Imitation is the sincerest form of flattery, but it’s also the easiest method of learning. Looking at existing whitepapers before writing your own can be all you need to give you an idea on how to start. Just don’t plagiarize!
Grammar, Punctuation, Spelling - Remember, a whitepaper is a professional document. Even if you don’t fancy yourself a great writer, your whitepaper must be free of spelling or grammatical mistakes. It may seem minor, but well-written paper establishes credibility.
Revise, Cut, Edit, Repeat - Another important writing rule is to cut, cut, and cut. Get rid of anything that doesn’t add to the whitepaper, in terms of explaining, education or persuading an investor or collaborator to take action. That leads to our next point.
Get Feedback - You’ll never fully know what works in a whitepaper unless you have real human reactions toward it. Look for fellow entrepreneurs, developers, investors and others who have read technical documents before. Pay close attention to their reactions and suggestions. This will give you a sense of what you can keep or what needs revision.
It Starts With Words, Not Code
It’s easy to assume that a blockchain application begins with code, considering the wide range of technical aspects involved. But a blockchain application lives or dies by its blueprint - the whitepaper. It displays everything that your investors and collaborators need to see about your application - its technical, creative, strategic and financial aspects. With that blueprint in mind, your team and all those involved with the project will have a clear roadmap for your project for both the near and distant future.