Whitepaper and yellow paper for crypto projects

Gepubliceerd op 16 juli 2023 om 09:30

More and more crypto projects are emerging. Today there are about 10,000 crypto projects and every day new ones are added. So it is very difficult to pick out the right project and find out the reliable ones.

What is a whitepaper?

The definition of a white paper is "a report or document that succinctly informs the reader about a complex issue and reflects the philosophy of the issuer on the matter''. Thus, a white paper is intended to help readers understand a specific problem in order to then solve it or to provide particular insight. So the intention of a white paper is to inform the reader in an objective way about a crypto project, for example.

So in the world of crypto, a white paper is a document compiled and published by a project's team explaining the technology and purpose of a protocol or crypto project. Examples of information that is included in a white paper:

  • What problem do they want to solve?
  • In what way do they want to contribute?
  • What is the added value of their protocol?
  • Learn more about their tokenomics
  • More information about the team
  • Do they have any partnerships?
  • How do they see the future of their protocol?
  • Technical explanation of their project?

Blockchain technology is a whole new technology that is still uncharted territory for many. Therefore, a white paper is also meant to provide more information in a simple way. A white paper should be understandable to a large audience, so they need to understand exactly what a protocol does, what problems they address and what is their vision and mission. In addition, it should not be forgotten to include the technical explanation of the project (see also yellow paper). 

In the world of crypto, the most famous white paper is undoubtedly the Bitcoin white paper published in 2008 by the mysterious Satoshi Nakamoto. The whitepaper called "A Peer-to-Peer Electronic Cash System" was the start of this new financial revolution and the decentralization of monetary policy.

Features whitepaper
The best example, of course, is the white paper Bitcoin: A Peer-to-Peer Electronic Cash System. This surely legendary document heralds a new revolution. The Bitcoin whitepaper is divided into 11 sections that briefly explain the bitcoin protocol, like:

Timestamp Server
Simplified Payment Verification
Privacy ...

What is the purpose of a white paper?
This may seem like a redundant question, but what exactly is the purpose of a whitepaper? A whitepaper is meant to explain a protocol and share their vision and mission with the general public. And this in a simplified and clear way. The purpose of a white paper is to inform as many people as possible, hoping that they too believe in their vision. So white papers are meant to convince potential investors.

What is a yellow paper?

A yellow paper is a technical, mathematical description that elaborates on the programming of a particular protocol, among other things. For example, Ethereum (ETH) is a decentralized blockchain where individuals and organizations can conduct transactions among themselves based on smart contracts, without interference from third parties. But how exactly does it work? How does it work in the source code? A white paper provides more information on this, but as a non-programmer, it all remains abstract. Abstract enough to understand as a "normal" human being. A yellow paper, on the other hand, is written for a totally different audience and target group.

The yellow paper is actually a deep-dive into the technology of the protocol, for interested parties and programmers. We can characterize a yellow paper by following properties:

  • More technical paper: written for programmers, among others, or those who are more knowledgeable about programming.
  • Focus mathematical and technical development: the white paper focuses on vision and mission, but in a yellow paper the team goes deeper into source codes and how a particular mechanism works.
  • Scientific analysis: not human language, but clear computer language.
  • Complex computational equations: Focus on abstract formulas.

Why a yellow paper?

A yellow paper is designed for developers, with more knowledge of blockchain technolgy.

Blockchain technology is still relatively young. Therefore, in this era, it is important to have the best developers on board to help build this future. Through a yellow paper, they can reach out to potential developers in hopes that they too will help build their protocol/blockchain code.

Besides a rather general vision and mission, partners want to know exactly how they want and achieve their goals. This is only possible if they are transparent about the technical issues.

Institutional investors
Investors want sufficient information to determine for themselves whether it is worth the investment. A technical explanation in the yellow paper gives institutional investors more information about the viability and future of a project.

What is a Beige Paper?
In addition to a white paper and a yellow paper, there is also a beige paper. It can happen that a white paper is a bit too concise for a developer or investor and a yellow paper is too complicated. A beige paper is a rewrite of a yellow paper, for better readability. So the idea is that this complicated material can be understood in a simplified way.

What is a light paper?

This is an abbreviated and condensed version of a white paper. It is a simplified document of the white paper outlining the main points. This allows readers to learn about a protocol and how it works in a relatively short period of time. It is in fact the first step to the whitepaper. Are readers captivated and still want to know more? Then they can read the white paper.

General paper Technical paper
Detailed paper Whitepaper Yellow paper
Shortened paper Light paper Beige paper

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