What To Look For In A Promising ICO Project: The Whitepaper.

May 14, 2018

The ‘Whitepaper’ should demonstrate the value of the project.




If there was ever a rapidly growing phenomenon in business, it is the conduct of Initial Coin Offerings to sponsor start-up projects. Creating your own token has become the order of the day in the cryptocurrency space. However, because of the rise of scam ICOs there is a need to distinguish a genuine project from a scam. One of the most important part of an ICO is the “whitepaper”.

1 The Importance of the White Paper

This is perhaps the first thing that one should thoroughly read and understand before committing to the project. A whitepaper is basically an elaborate explanation of the business plan for the ICO project. This means detail of the project should be included in this document. From the objectives of the project and the execution plan to the feasibility findings from empirical research. Since ICOs are an online funding initiative, the only way to pitch an idea to investors is through the white paper, therefore, failure to pitch your idea will affect its credibility.

Product presentation

The basis of business is the product, so when you are reading the whitepaper, you should ask the following questions. What is the product? Is it a viable and profitable product? How is this product going to rival similar products on the market?

Goldma’s whitepaper is a good example because it is clear about the following: the product of the project is gold, there are scientific findings from actual geological explorations that are contained in the document; the distinguishing factor in the project is the fact that the GMA cryptocurrency is backed by gold royalties from an actual fully functional mining operation that has been running for over four years.

The Logic Behind The Project

Investors have the right to question the purpose of the project and why it is best suited for an ICO. There should be a problematic scenario that requires an ICO as a business solution. If the whitepaper can substantiate why they need to conduct an ICO then it is a sign of a potentially profitable project. Also, examine if the idea of the project makes sense. Is it an attainable goal? If it is an asset-backed ICO, is it a feasible idea that is backing the token? All these questions should determine if there is any logic behind the ICO.

Use of proceeds

A good whitepaper must be explicit about how they will actually use the capital raised from the ICO. This means there should be a detailed budget allocation showing where and how investors’ funds will be spent on the project. If it is not clear in the whitepaper then we may question the project’s legitimacy.

What is in it for investors?

The last but not least aspect that should be questioned is the return on investment. Investors have a right to know how they will be making money from an investment. The Goldma ICO for example will pay out a 5% royalty from the net profits of its Sunrise mining operation in the for of Ether. This has been clearly explained in the Goldma whitepaper, including the logistics of how it will be one and the scheduling of the royalty payment which should be once every quarter.

A well written whitepaper should demonstrate how the project will be profitable for investors because it is about getting returns at the end of the day. Therefore, an ICO’s whitepaper should be a determinant factor to help you decide to invest or not. This document must be carefully examined and understood.