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15 point checklist to read ICO whitepaper

Initial Coin Offerings aka ICO is the stage when the crypto project is gathering funds for their on-going development. However, this is not necessarily true for all crypto projects. Some ICOs also plan to grow their existing businesses as well.

Unlike IPO (Initial Public Offerings) in stock markets, Cryptoasset (more generally referred as cryptocurrencies or altcoins) market is not regulated by any state or government entity until today. It’s the trust that governs this crypto ecosystem. It is funny to consider that a level of trust needs to be built in any ICO (Initial Coin Offerings) when the sole purpose of blockchain is to transact in a trustless manner. Since ICOs are not yet endorsed by any Governmental entities the money if invested in ICO then there is zero protection.

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Before proceeding further, we would like to clearly state a small disclaimer. Considering the way current crypto space works, there are no strict rules on writing white papers for any ICO. And do not consider this article as investment advice, we do not advice on any kind of investment.

We share 15 point checklist to read ICO whitepapers to help build some level of trust. It is safe to assume that author of this article has invested in few ICOs.

  1. Establish validity of registered company behind any ICO. Being a registered company as a first filter helps us identify two things. One ICO is backed by a valid firm and second, it is quite possible to track history online of a registered firm, nowadays.
  2. Identify the product/service that ICO is proposing. Is it a feasible product or service?
  3. What is the key problem being solved? and how efficiently it is solved?
  4. Are there any other solutions in the market that solve a similar or same problem? ,i.e. identify the competition.
  5. Is there any prototype already available? If not then what are the timelines for the first prototype and subsequent product/service milestone dates?
  6. Apply PESTEL analysis as a rule of thumb. The political pillar (P in PESTEL) can be discounted considering unregulated crypto space.
  7. The leadership team is the key to any project. It is true for any ICO as well. It may not be hundred percent accurate, but Linked is the good place to establish the identity of the leadership team and their experience at the very high level. Do your due diligence to establish leadership credentials.
  8. Also look for endorsements by popular entities or people that you know or trust. This is not hundred percent accurate filter but another point in our checklist.
  9. Underlying blockchain ecosystem is another aspect to look at. Is it altogether a new blockchain or existing blockchains such as Ethereum or NEO are used?
  10. Is token symbol finalized and registered on the underlying blockchain?
  11. The growth prospects of the crypto token is another key area to look at, i.e an investment yield.
  12. The ICO’s plan to use different crypto exchanges. Are popular exchanges are listed? Remember crypto exchanges are private entities and not backed by any government at the time of writing this article. But these crypto exchanges are only way to trade or buy/sell crypto tokens.
  13. What will be the buying pressure on the tokens once it starts trading? This will help us gauge token growth in terms of its dollar value ($).
  14. Token distribution: Cleary identify token spread. The total number of tokens for the whole project Vs its distribution among core team members, early investors and available during ICO.
  15. Read fine lines aka terms and conditions listed in the whitepaper.

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Finally, remember ICO whitepaper is PDF document not endorsed by any legal entity but written by a private party (assumption only true at the time of writing this article). Try to go through some of the completed ICOs, read their whitepapers, apply this checklist.
This article was written by Mandar Pise and originally posted at TechSutram.com
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