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Lose the white paper! This is the right way to evaluate the value of a blockchain network

White paper, which lists the blockchain, protocol or dapp that the team is building, and explains how issued tokens work.

Sometimes this is a highly technical document, while others are mostly marketing documents.

I think the white paper is irrelevant to investors for most of the time.

Cryptocurrencies Investors like white papers, though I'm not sure if they really read the white paper. Mostly, they skip the white paper and ask, "Why not use a database instead of a blockchain to do this?"

This is a very valid question. Of course, "why do you even need a database?" This is also a very valid question. "Because you can use spreadsheets or comma-delimited files, you can even dig your books on slate."

Put forward the correct question

Most cryptocurrency investors do not ask good questions. In fact, most people in the cryptocurrency forum ask the same question over and over again, or issue three or four identical criticisms of the blockchain.

But the overall concept of blockchain and distributed systems opens up many new, cool possibilities. The way to understand this is not to evaluate the technical advantages of the blockchain through a white paper. It's like evaluating Amazon's e-commerce capabilities based on a low-level server infrastructure design.

Blockchain technology is still in its early stages of development, so blockchain technology should be evaluated in the same way it does for startups. Focus on the underlying technology through the white paper is similar to the main view of the startup company's architecture to decide whether it should invest. This is useless, it's just a small amount of data in a lot of data.

When investors see the white paper, they did not realize that blockchain technology will definitely change. why? As technology changes, use cases will widen, and other blockchain technologies will compete for attention.

In other words, there is no reason to think that there will be no technological innovation in the blockchain. What really needs to be considered is what daub or blockchain technology being evaluated, what will happen to the blockchain network.

VC's attitude

I think it's much better to evaluate a blockchain technology than evaluating a startup - you think it's a real starting point, not an end. In my opinion, it is a mistake for cryptocurrency investors to evaluate a white paper like the final product.

When I looked at cryptocurrency trading, I was thinking of something different: I was thinking where they started, what they might become in ten years, and how they did it.

If you want to evaluate your chances this way, here are four things to consider:

1. Team - This is my first look. It's hard to build a blockchain network. Can the team attract partners and participants? Most of what I see is questionable. I am looking for more than just a group of geeks who know blockchain technology, and I want to see business people who understand marketing.

2. Vision - What is the purpose of the blockchain technology development? Can you create the first application? In the long run, the more blockchain networks can do, the more valuable it is.

3. Scope - is this blockchain web use case definition broad or minority? This is a dilemma similar to evaluating new software and new applications. Too broad, then information and positioning will not stand out and will be swallowed up by rivals that are more focused on segments. If it is for the few, it will only have a small market segment, and it will be very hard to broaden the market.

4. Old and new market competition - I know I am a minority, but I do not think the blockchain will destroy most existing markets. The well-established market ecosystem has no incentive to change. On the contrary, I think the blockchain will probably turn previously unreliable markets into new markets. But I still suspect something like the real estate blockchain.

So the next time you see a token or blockchain network, read the white paper down. It's just the second, not the main, factor in your investment.

Spend your time watching the team, understanding their vision, researching market opportunities, and reflecting on the future of the blockchain. You will make a better decision.