What are Whitepapers and Litepapers?

The world has changed dramatically in the last few years, and cryptocurrency has played a significant role in this transformation. The IT and technology sectors are expanding, and the work-from-home system has allowed people more time to do activities they enjoy.

All of these factors have accelerated the cryptocurrency adoption and created a favorable environment for the development and launch of new projects. However, not all projects are worth your time and money. As a result, before investing in a new project, you must be picky and cautious.

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Whitepaper and Litepaper are two methods of researching a cryptocurrency project that provide all details about the project. This article will explain what whitepaper and litepaper are and how they differ from one another.

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What Is A Whitepaper?

A whitepaper is a document that a cryptocurrency project publishes at the time of its launch. It provides a comprehensive overview of the project. The whitepaper contains project details such as the project's objective, underlying technology, and tokenomics of its native token.

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A whitepaper is a way for a project to build trust and prove its authenticity in the crypto industry. A whitepaper that demonstrates the project's excellent fundamentals might help convince investors to fund their ventures.

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However, a whitepaper from the perspective of investors/traders might assist them determine whether or not to invest in cryptocurrency. A whitepaper allows a trader to learn about the project and its operating model, as well as predict how the cryptocurrency will perform in the future.

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What Does A Whitepaper Tell You?

To truly understand a crypto project, you must properly examine the project's whitepaper. There are 5 basic elements you should look for in each published whitepaper. Here are the five things that a whitepaper will tell you.

1. What Issue Does The Project Propose To Fix?

At the beginning of every whitepaper, you will find the reason behind creation of the project. The blockchain technology is evolving day by day as a result of the cutting-edge solutions provided by numerous crypto projects. Every new project offers a solution to an existing problem through the introduction of their blockchain. 

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A whitepaper will address the problem that the project team intends to solve by showcasing the solution that they have offered. This is the first stage in determining whether the project is valuable.

2. What Utility Does The Project Offer?

Every cryptocurrency we see, serves some kind of function to the project or to the crypto market in general. The utility of a token may be a governance token for a platform or an NFT or even a stable currency to provide liquidity. Token with a real-world utility  is more likely to be adopted.

3. What Type Of Token Distribution System is Used By The Project?

The way the project team decides to distribute their tokens is of utmost importance as it greatly affects the performance of the tokens post-launch. Distributing large amounts of tokens before launch often indicates a pump & dump scheme where token's value sharply falls after the launch. 

4. What Is The Working Model Of The Project?

This is the most significant section of any whitepaper since it explains exactly how the project will work, what technologies will be used, and how it will achieve the intended goal. All details will be addressed and displayed in the form of graphs and figures in the whitepaper.

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The consensus system on which the project has decided to work on will also be mentioned in the whitepaper. A Proof-of-Work or Proof-of-Stake system can be used for a project. Consensus mechanisms have a significant impact on transaction seeds, network specifications, and blockchain.

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5. What Is The Planned Timeline Of The Project?

Whenever a new project is introduced, its founders create a roadmap for its upcoming events. The timeline shows when the team intends to list its token, when an upgrade is planned, when new features will be introduced, and so on.

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A well-planned and realistic timeline demonstrates the team's dedication to the project. So you should always look through the project timeline, which is usually found near the end of a whitepaper. 

What Is A Litepaper?

A litepaper is the type of document that describes an application or project's architecture and a general view of what the project entails for the developers. This document must be as simple as it can be so as to make reading easy so that people unfamiliar with the technicalities can understand it as well.

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The purpose of litepapers is to tell all the people involved what the project is going to be about and it also helps in reducing the project risk as every member that is involved knows what they have to in order to keep the project going.

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So in short, a litepaper is basically just a briefer version of the whitepaper and it is something that helps in attracting the attention of the investors or users. These were invented because like everything in the world these days, whitepapers needed to be made less time-consuming as well.

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So as the name suggests, Litepaper is a document that is a lighter version of the whitepaper as it has all the information that an investor or user would find useful without having to read a long document like Whitepaper which can be as long as 60 pages. 

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What Does A Litepaper Tell You?

Like Whitepaper, Litepaper has its share of things that tells you about a project but in a much precise way. Let us have a look at what these things are.

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1. Introduction To The Project

The first thing that the litepaper would have would obviously be the introduction to what the project is about. It will be in a few sentences and would be written as simply as possible and yet, will be very intriguing. Some people would decide whether they want to read further about the project or not depending on this.

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2. The Issues Being Solved By The Project

After the introduction comes various technical things and one of them is what issues or problems the project is aiming to solve. It would outline what problems they will solve and might also give you some situations that you will find relatable so that you find it useful.

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After that will be the 'How' of the problem solving. This will be done briefly as it is just a litepaper. You will get to know how the issues affect the market and how the project will tackle it and the improvements it would bring to the market.

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3. Token And Market Stats

When a project is launched, one of the best ways to attract users or investors towards it is by showcasing the numbers i.e. how the project is affecting the market and how much positive response the market is giving to it. This will show that the solution that the project offers, is genuine.

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One of the most important things that the project managers or organization include in the Litepaper is details about the token that they will be launching. They tell you how the tokens will be used in the market, the supply chain, etc. It would also include some important token sale dates.

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4. The Road Ahead

Apart from all the statistics and details about the project, the one thing that will attract the investors or users to a project would be the roadmap that the project organization would have for the future. 

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What is also important, is the experience of the team behind the project. The more experienced the team, the more trust people can put on them. So when they give a roadmap about what they aim to achieve in the future with the project, the interest of the users will be spiked.

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Some other things that are included in a Litepaper are the website and contact details about the project organization as well as what softwares or applications you would need, like some specific wallets, to transfer or use the tokens.

Conclusion 

So basically, Whitepapers are documents that give you all the details about a project, like all the uses a particular project will have or what upgrades it is bringing in the market or what issues it is trying to fix, etc. Whitepapers would enlist all these things in quite some detail and that too in technical terms which might make it hard for a regular investor to understand.

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Hence, Litepapers were introduced. They are like a teaser to the Whitepapers or the whole project as they only give the essential information for an investor to make decisions on whether to invest in the project or not. 

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The crypto world is full of a lot of interesting things and a lot of the users might not understand them all, hence, we are here to help you. So if you need assistance with understanding anything about cryptocurrencies, check out the other articles on our site.

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