I’m not going to name any particular coins or white papers because I save my venom for people I really despise such as vindictive, cynical, and capricious technocrats, lawyers, and judges. But here are a few general things I would look for when reading a white paper and deciding whether to invest in a cryptocurrency.
I have seen white papers so badly written and organized that I could not even get through the first page. Yes, many people developing cryptocurrencies do not speak English as a first language, and it is understandable that if they write it in English, their work will contain some mistakes. But a paper splattered with random information, incomplete sentences, and jargon isn’t worth reading, and if something is not worth reading, it is not worth investing in. I’ve taught Ukrainian, Russian, and Turkish teenagers who speak English as their third or fourth language who write better. If they can do it, a group of developers should be able to put something together that is half understandable.
Also, there is no reason why a white paper should be published with so many mistakes. If you’re a developer with a white paper riddled with mistakes, hire a proofreader and editor. It won’t cost more than a few hundred dollars. You can also write the white paper in your native language and hire an American or British translator who speaks your language. It won’t cost much more than hiring an editor.
A badly written white paper is not necessarily a sign of criminal activity. But if the developers are too stupid or lazy, or both, to write a proper white paper, don’t bother. God knows what else they screwed up.
Here is a fun thing to do, especially if you’re a teacher grading papers. Highlight a sentence in the article, copy and paste it in Google, and then scan through the search engine results. If you see that sentence on 50 different pages, the white paper – or essay – is plagiarized. Plagiarism on a white paper is a sign the people who wrote it are up to no good.
Does Not Address a Real Problem
A coin or token is developed to address a problem. The white paper should identify that problem, explain why it is a problem, and then clearly state how the coin or token solves it. If this new coin or token does not solve a problem, there is no point investing in it.
No Information About the Developers
The information about the developers should be on the white paper, or it should be on the website along with the address where they work. Some white papers do not have this information. As far as I know, Bitcoin doesn’t. But Bitcoin is an exception to the rule, and the exception exists to prove the rule.
People should be proud enough of their work to put their names on it. William Fleishman is proud enough of his work to put his name on this article, and I’ll face the consequences if I write a shoddy piece. Why shouldn’t developers put their names on a white paper or somewhere on their site? I could be wrong, but I think such people have something to hide.
Just because a white paper meets these criteria does not mean it represents a scam, but it is an investment you should have second thoughts about.
I want to add that developers should not write anything readers need a PhD to understand. Make the article readable and avoid using jargon. Make sure industry-specific words are clearly defined.